The post 0% Interest Crypto Loans: How Standby Credit Lines Work appeared on BitcoinEthereumNews.com.

The idea of a 0% interest crypto loan often sounds misleading. In practice, it usually refers not to free borrowing, but to a standby credit structure where interest applies only when funds are actually used. Standby crypto credit lines change how borrowing works by separating access to capital from the cost of using it. This distinction explains how 0% interest is possible—and when it applies. What “0% Interest” Means in Crypto Lending In most cases, 0% interest does not mean that borrowed funds are free indefinitely. Instead, it means:

No interest on unused credit

Interest applies only after withdrawal

Cost depends on how much capital is actually used

This model contrasts with fixed crypto loans, where interest accrues on the full amount from the moment the loan is issued. Fixed Crypto Loans vs Standby Credit Lines A fixed crypto loan works in a simple but rigid way. You deposit collateral, receive a lump sum, and begin paying interest immediately on the full balance. A standby credit line works differently. You deposit collateral and receive a credit limit, not a loan. Borrowing is optional. If no funds are withdrawn, no interest accrues. This is where the 0% figure comes from: unused credit carries no cost. How Standby Crypto Credit Lines Work A standby crypto credit line follows a revolving structure:

Crypto is deposited as collateral

A credit limit is assigned based on LTV

Funds can be withdrawn at any time

Interest applies only to withdrawn amounts

Repayment restores available credit

The credit line remains open, even when unused. This structure suits users who want liquidity available without committing to interest payments in advance. Clapp’s Standby…

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Filed under: News - @ December 25, 2025 12:24 pm