Debt payoff calculator

How the calculation works

The calculator runs your debts forward one month at a time, the same way your lenders do. Each month it adds interest to every balance, takes your payments off, and checks whether anything has hit zero. It repeats that until every debt is gone, then reports how long it took and how much interest you paid along the way.

In plain words, the steps for each month are:

1. Add interest. For each debt, monthly interest is the balance times the APR divided by 12. A $5,400 balance at 24.99% APR picks up about $112 of interest in a month.
2. Pay every minimum. Each open debt gets its minimum payment, so nothing falls behind.
3. Send the rest to the target debt. Your total monthly budget is all the minimums plus your extra amount. Whatever is left after the minimums goes to one target debt.
4. Roll it over. When a debt is cleared, its minimum payment does not disappear. It stays in the budget and joins the extra amount on the next target. This is the rollover that makes both methods gather speed.

The only difference between the two methods is the order of the targets:

• Snowball sorts debts from the smallest starting balance to the largest. You get your first debt out of the way sooner, which many people find keeps them motivated.
• Avalanche sorts debts from the highest APR to the lowest. Money goes first to the debt that charges the most, so less of your payment is lost to interest overall.

How to read your result

The headline number is the difference in total interest between the two plans. Under it, each plan shows three figures: the time until your last debt is paid, the total interest you would pay, and the total of all payments. The table lists the debts in the order they are cleared, with the month each one reaches zero.

Look at two things together. The interest gap tells you what the faster feeling of snowball costs, in dollars. The first payoff month tells you how long you wait for your first win under each plan. If the gap is small, the plan you will actually stick with is usually the better one. If the gap is large, avalanche is worth a closer look.

If you see "Not paid off", your total payment is not much more than the interest being added, or less than it. That does not mean the debt is hopeless. It means the payment needs to rise, the rate needs to come down, or both.

A worked example

The calculator opens with three debts and $200 a month extra:

• Personal loan: $1,800 at 8.5% APR, $60 minimum
• Credit card: $5,400 at 24.99% APR, $160 minimum
• Car loan: $9,800 at 6.5% APR, $240 minimum

The minimums add up to $460, so with the extra $200 the total budget is $660 a month.

Snowball goes after the personal loan first because it is the smallest. It is gone in month 8. Its $60 then rolls onto the credit card, which is cleared in month 22, and everything finishes with the car loan in month 30. Total interest comes to about $2,697.

Avalanche goes after the credit card first because it has the highest rate. It is cleared in month 19, the personal loan follows in month 21, and the car loan finishes in month 30. Total interest comes to about $2,361.

Both plans take 2 years 6 months, but avalanche costs about $337 less. Snowball gives you a paid off account in month 8 instead of month 19. That is the real trade: $337, against an early win 11 months sooner.

Mistakes to avoid

• Adding new charges. The plan assumes the balances only go down. New spending on a card you are paying off quietly pushes the finish line back.
• Dropping the rollover. When a debt is paid, it is tempting to spend the freed up minimum. Keep paying the same total each month, or the plan stretches out.
• Using the wrong rate. Use the APR from your latest statement, not a promotional rate that is about to end. If a 0% offer expires, enter the rate it will jump to.
• Skipping the safety net. With no cash buffer, one surprise bill can land back on a card. A small emergency fund alongside the plan helps it hold.
• Treating it as exact. Lenders calculate interest in slightly different ways, often daily, and minimums on cards usually shrink as the balance falls. Treat the dates as a close estimate, not a statement.

Common questions

Is snowball or avalanche better?

Avalanche almost always pays less interest, or the same, because each extra dollar goes to the most expensive debt first. Snowball can still be the right choice if quick wins help you keep going. A plan you follow for three years beats a cheaper one you drop after three months. Run your own numbers above and see how big the gap really is.

What counts as my extra payment?

It is the amount you can pay every month on top of all your minimums combined. Pick a number you can keep up, even in a tight month. You can always pay more when you have it, which only brings the date closer.

Why does the same total payment matter so much?

The rollover only works if the money from each cleared debt keeps going to the next one. If your total payment falls each time a debt is cleared, you are back to paying minimums on what is left, and the timeline can stretch by years.

Should I talk to someone before choosing a plan?

These results are estimates based on the numbers you enter. If you are behind on payments, juggling more debt than you can cover, or thinking about consolidation, a balance transfer or bankruptcy, talk to a financial adviser or a nonprofit credit counselor first. They can look at rates, fees and options this calculator cannot see.