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How does interest work?

Your iLOC uses simple and flexible interest accruals, here's how they work.

When your balance is under your credit limit, payments are optional.

Interest Accruals

Your iLOC uses a daily interest calculation, that is it adds 1/365th of your interest rate times your principal balance to your interest balance each day.

Periods, Statements, and Due Dates

Interest accrues on your principal balance during each monthly period. At the end of the period that interest becomes 'due' and you'll receive a statement listing that amount. The interest from that period is 'due' in 21 days -- but if you are under your credit limit, payments are usually optional.

Payments are Usually Optional

You can always elect to pay your due interest from one of your connected bank account (see Draws and Payments) however if your balance is below your credit limit, you can simply let the interest capitalize to principal.

Any interest that remains unpaid by the due date will convert to principal – there are no fees and penalties for capitalizing interest. Once converted to principal that amount will begin accruing interest like any other principal.