The owner's workbench
Rate-Shock Test: What a Rate Hike Costs You
Free calculator: see how a 0.25% to 1.00% rate increase changes the yearly and monthly interest on your line of credit and variable-rate loans.
Illustrative example. Ridgeline Builders Co. is fictional. Enter your own balance, rate and profit.
Your numbers
Your results
| Rate increase | New rate | Added yearly interest | Added monthly cost | Share of net profit | At full credit limit (yearly) |
|---|---|---|---|---|---|
| +0.25% | 10.25% | $125.00 | $10.42 | 0.2% | $375.00 |
| +0.50% | 10.50% | $250.00 | $20.83 | 0.4% | $750.00 |
| +0.75% | 10.75% | $375.00 | $31.25 | 0.6% | $1,125.00 |
| +1.00% | 11.00% | $500.00 | $41.67 | 0.9% | $1,500.00 |
Context · as of October 26, 2026
The Fed meets Oct 28. The federal funds range is 3.75% to 4.00% and the prime rate is 7.00%. Many lines of credit and SBA variable loans are priced as prime plus a margin, so a prime change moves your rate by the same amount. Check your loan agreement for your index and margin.
This tool does not predict Fed decisions.
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Guide: 13-week cash flow forecast
Related tools
What-if scenarios
- Compare several scenarios side by side
- See which input moves the result most
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Estimates only. Results depend on your inputs.
How this is calculated
Added yearly interest = balance drawn × shock
Added monthly cost = added yearly interest ÷ 12
Share of net profit = added yearly interest ÷ net profit before tax
Fully drawn case = credit limit × shock
How to use it
- Enter the balance drawn and your current interest rate.
- Add your credit limit and net profit before tax for context.
- Read each shock step; check the full-limit column if you plan to draw more.
A rate shock is a what-if, not a forecast
A rate-shock test asks one question: if my variable rate rises by a set amount, what does the extra interest cost? Enter the balance you have drawn, your current rate and, optionally, your credit limit and net profit before tax. The four shock steps are editable; the defaults are 0.25, 0.50, 0.75 and 1.00 percentage points.
The tool does not predict Fed decisions. It shows the arithmetic of a change so you can see how much room your profit has.
Examples use made-up numbers. Education only, not tax, legal or investment advice.
Worked example: Ridgeline Builders Co.
The setup
Illustrative example.
Ridgeline Builders Co. is fictional.
The company has $50,000 drawn on a line of credit with a $150,000 limit, a 10.00% rate and $58,400 of net profit before tax.
A 0.25-point increase adds $125 a year, or $10.42 a month, which is 0.2% of profit.
A 0.50-point increase adds $250 a year ($20.83 a month, 0.4% of profit).
A 1.00-point increase adds $500 a year, or $41.67 a month, about 0.9% of profit.
If the line were fully drawn at $150,000, the same 1.00-point increase would add $1,500 a year.
Read the share of profit, not just the dollars
$500 a year sounds small next to $58,400 of profit. The same shock on a fully drawn $150,000 line triples it. Owners who plan to draw more should read the full-limit column, not the current-balance column.
Interest is also only one effect. A higher rate can tighten lending standards and slow customer spending. This tool measures the direct interest cost only.
Educational only, not financial advice.
Questions owners ask
What is a rate shock test?
A what-if calculation that shows the extra interest a set rate increase would add to your variable-rate borrowing. It is arithmetic, not a forecast.
Which loans move with the prime rate?
Many lines of credit and SBA variable-rate loans are priced as prime plus a margin, so they move when prime moves. Fixed-rate loans do not. Check your loan agreement for the index.
How do I find my rate and margin?
Your loan agreement states the index, such as prime, and the margin added to it. Your current statement shows the rate in effect.
Does this predict what the Fed will do?
No. The tool shows what a change would cost if it happened. It makes no prediction about Fed decisions.
Sources
No external research cited. Calculations and illustrative assumptions are shown above; this is not evidence of a real owner outcome.
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