💳 Debt Payoff Calculator
List your debts, set what you can pay each month, and compare the snowball and avalanche methods side by side.
How to use the Debt Payoff Calculator
List each debt with its balance, rate and minimum payment, then compare the avalanche method against the snowball method to see which clears the debt faster and for less total interest.
How it works
Two strategies compete. Avalanche targets the highest interest rate first, which mathematically minimises total interest. Snowball targets the smallest balance first and clears accounts faster, giving early wins that many people find easier to stick with. Mathematically avalanche is always cheaper; psychologically snowball is sometimes the only plan you will actually follow.
When to use it
Use it to decide whether to prioritise by rate or by balance, to forecast the month you will be debt-free, and to check whether paying extra is actually faster than you think.
Worked example
Three debts, $700 a month available:
| Debt | Balance | Rate | Avalanche order |
|---|---|---|---|
| Card A | $4,000 | 24.9% | 1st |
| Card B | $2,500 | 18.9% | 2nd |
| Personal loan | $8,000 | 9.5% | 3rd |
Assumptions and limitations
Results depend on your total monthly payment and whether it changes. Balance transfer offers and rate promotions are not modelled. Some debts carry prepayment penalties. Confirm whether your minimum payments cover accruing interest; if they do not, the balance can grow even while you pay on time. Consider a nonprofit credit counsellor for free guidance.
Debt Payoff FAQ
Snowball vs avalanche — which is better?
Mathematically the avalanche method wins: paying the highest interest rate first always costs the least total interest. But studies of real borrowers consistently find the snowball method (smallest balance first) gets more people to actually finish, because clearing a whole account early delivers a psychological win. If the two methods land within a month or two of each other for you, pick the one you will stick with.
How is minimum payment calculated on a credit card?
Most US issuers charge either a flat percentage of the balance (commonly 1–3%) or a fixed dollar amount (often $25–$35), whichever is greater, plus that month's interest. Because the percentage shrinks as the balance falls, minimum-only payments stretch a card out for decades — this calculator assumes you keep paying the same fixed total each month instead.
How much does an extra $100 a month actually save?
More than most people expect, because extra money hits principal and every dollar of principal removed also removes all future interest on it. Try your real numbers above, then raise the monthly payment by 100 and compare the interest total — the gap is your saving.
Should I pay off debt or invest first?
Compare the interest rate on the debt with the return you expect from investing. Paying off a 22% credit card is a guaranteed, tax-free 22% return, which no realistic portfolio beats. Low-rate fixed debt such as a 3% mortgage is a different question — many people invest while paying that off slowly.
Does paying off debt hurt my credit score?
Closing accounts can trim your available credit and slightly raise your utilization ratio, but paying balances down sharply lowers utilization — the second biggest scoring factor — so the net effect of paying off debt is normally positive. Paying on time matters most of all.
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