Debt Payoff Calculator

What Is the Debt Payoff Calculator?

The Debt Payoff Calculator is a free online planner for people who owe money on more than one account, such as credit cards, a car loan and a personal loan. You list each debt, add any extra money you can put toward debt every month, and the tool builds a month-by-month plan that shows exactly when each balance reaches zero and when you will be completely debt free.

It compares the two best-known payoff methods. The avalanche method pays extra money to the debt with the highest interest rate first. The snowball method pays extra money to the debt with the smallest balance first. Both keep paying the minimum on every other debt. The calculator also runs a third plan where you pay only the minimums, so you can see how much time and interest a focused plan saves you.

What the Calculator Can Do

• Any number of debts. Each debt has a name, a balance, an APR and a minimum monthly payment. Use Add debt to add a row and the bin button to remove one. Rows with a balance of 0 are ignored.
• Extra monthly payment. Enter an amount you can pay on top of all the minimums. It goes to the current target debt every month.
• Automatic rollover. When a debt is paid off, its minimum payment is not dropped. It is added to the money going to the next target, so your total monthly payment stays the same until everything is cleared.
• Avalanche or snowball. A toggle switches the main result between the two methods.
• Side-by-side comparison. A table shows avalanche, snowball and minimums only next to each other: time to debt free, debt-free date, total interest and total paid. The cheaper of the two methods is highlighted in green.
• Debt-free date. Shown as a month and year counted from the current month, plus the number of months and the same time in years and months.
• Savings figures. Interest saved and time saved compared with paying only the minimums.
• Payoff order. A table lists each debt in the order it is cleared, with its APR, starting balance, interest paid on that debt and the month it reaches zero.
• Balance chart. A line chart shows your total remaining debt month by month for all three plans.
• Safety checks. If a minimum payment does not cover the monthly interest on that debt, the tool shows an error, because that balance would never go down. Plans are simulated for up to 600 months (50 years).
• Eight currencies. USD, EUR, GBP, INR, BDT, CAD, AUD and JPY. The currency only changes how amounts are shown.

Why a Payoff Plan Helps

When you only pay minimums, most of each payment can go to interest, and the balance falls slowly. A plan changes that in two ways. First, any extra money goes to one debt at a time, so that debt disappears quickly. Second, every cleared debt frees up its minimum payment, which then joins the extra payment. The amount aimed at each new target grows over time, which is why people call it a snowball or an avalanche.

The example on this page uses three debts: a credit card of 5,000 at 22.9 percent APR with a 150 minimum, a car loan of 12,000 at 6.5 percent with a 280 minimum, and a personal loan of 4,000 at 11 percent with a 120 minimum, plus 200 extra each month. Paying only the minimums takes 54 months and costs about 5,508.92 in interest. With the avalanche method the same debts are gone in 32 months with about 2,839.59 in interest, a saving of about 2,669.33 and 22 months. The snowball method takes 33 months and costs about 3,274.79 in interest, which is still a large saving, but about 435 more than the avalanche.

How the Calculation Works

The calculator does not use a shortcut formula. It simulates every month in order, the same way a lender would apply your payments:

1. Interest is added. Each debt with a balance gets one month of interest: balance x APR / 12. For the example credit card, the first month adds 5,000 x 22.9% / 12, which is about 95.42.
2. Minimums are paid. Each debt receives its minimum payment, or the remaining balance if that is smaller.
3. Extra money goes to the target. Your monthly budget is the sum of all the original minimums plus the extra payment. In the example that is 150 + 280 + 120 + 200 = 750 a month. Whatever is left after the minimums goes to the first debt in the strategy order. If that debt is cleared and money is still left, the rest moves to the next debt in the same month.
4. Repeat. The steps run again each month until every balance is zero or 600 months have passed.

The avalanche order sorts debts by APR, highest first. The snowball order sorts debts by starting balance, smallest first. The order is set once at the start, based on the numbers you entered. The minimums-only plan pays each debt its own minimum and nothing else, with no extra payment and no rollover, which is how most people pay when they have no plan.

All of this runs in your browser with JavaScript. Nothing you type is sent to a server or saved.

Avalanche or Snowball: Which Should You Choose?

The avalanche method almost always costs less interest, because the most expensive debt is attacked first. If saving money is your main goal and you are confident you will stick with the plan, it is usually the better choice. In the example, the avalanche clears the credit card in month 17, the personal loan in month 23 and the car loan in month 32.

The snowball method can cost more, but it gives you quick wins. In the example, the personal loan is cleared in month 14, three months before the avalanche clears its first debt. Many people find that seeing a debt disappear early keeps them motivated. Sometimes the two methods give the same order, for example when your smallest debt also has the highest rate. The comparison table makes the trade-off clear, so you can decide with real numbers instead of guessing.

How to Use the Calculator

1. Choose the Currency you want amounts shown in.
2. Edit the example debts or remove them, then use Add debt for each debt you have. Enter a name, the current balance, the APR and the minimum monthly payment from your latest statement.
3. Enter the Extra Monthly Payment you can afford on top of the minimums. Use 0 to see the effect of rollover alone.
4. Pick Avalanche or Snowball.
5. Read the debt-free date, the four summary cards, the side-by-side table and the chart. Scroll down to the payoff order table to see when each debt is cleared.
6. Try different extra amounts to see how much faster you could finish. Use Reset to example to go back to the starting values.

Practical Ways to Use It

• Set a realistic goal. Turn a vague wish to be debt free into a real month and year.
• Test your budget. Compare 100, 200 and 400 extra a month and see what each one is worth in time and interest.
• Decide where a bonus goes. Lower one balance by the amount of a bonus or tax refund and see how much earlier you finish.
• Check a balance transfer. Enter the card with its new promotional rate to see how the plan changes. Remember that the tool keeps the rate fixed for the whole plan.
• Stay on track. Update the balances every few months and check that you are still on course for the same date.

Limitations

The calculator assumes each APR stays the same for the whole plan and that interest is charged monthly at APR / 12. Real credit cards often charge interest on the average daily balance, and variable rates can change, so your real figures will be a little different. Promotional rates that end after a set time are not modelled.

It also assumes you make every payment on time, add no new spending to the debts, and pay no fees or penalties. Minimum payments are treated as fixed amounts. Many credit cards lower the minimum as the balance falls, which is one reason why paying only the minimums in real life can take even longer than shown here. Debts are cleared in a fixed order set at the start; the tool does not re-sort them during the plan. If a minimum payment does not cover a debt's monthly interest, the tool shows an error instead of a result. Plans that would take more than 600 months are shown as over 50 years.

What to Do and What Not to Do

Do use the exact balances, rates and minimums from your latest statements. Do keep paying every minimum on time, because missed payments can bring fees and higher rates. Do choose an extra payment you can keep up every month, even a small one; consistency matters more than a large amount you cannot sustain. Do re-run the plan when a rate changes or you pay off a debt early.

Do not keep using a card while you are paying it off, or the plan will not work. Do not empty your emergency savings to pay debt and then rely on the card for the next surprise bill. Do not treat the result as financial advice. If your debts feel unmanageable, speak to a qualified debt adviser or a non-profit credit counselling service.

Frequently Asked Questions