Debt Payoff Calculator

How to Use the Debt Payoff Calculator

Enter up to four debts, add whatever you can pay above the minimums, and the calculator simulates every month until the last balance clears. It runs both methods and tells you what choosing one over the other costs.

1. Enter each debt's balance, APR and minimum payment. All three matter. The balance decides snowball order, the APR decides avalanche order, and the minimum decides how much of your budget is already committed.
2. Leave the fourth row blank if you have three debts. Empty rows are ignored entirely rather than treated as zero-balance accounts.
3. Add your extra payment. This is the whole engine. Everything above the minimums goes to one target debt, and when that debt clears, its minimum rolls onto the next one — which is why the payoff accelerates rather than staying linear.
4. Switch methods and compare. The fourth tile reports what the other method would have cost. On typical consumer debt the difference is a few hundred in interest and a month or two of time.

If a debt's minimum does not cover its own monthly interest, the calculator says so rather than producing a nonsense schedule. That situation is not rare on cards near their limit, and it means the balance is growing even while you pay.

How the Simulation Works

There is no closed-form formula for multiple debts under a rolling budget, so this is a month-by-month simulation. Each month follows the same four steps.

Step 4 is the part people underestimate. In the default scenario the budget is $643 a month from the first payment to the last. As each debt clears, that same $643 is spread over fewer debts, so the final balance is being attacked with the whole budget rather than one debt's minimum.

Example

Two debts, $200 extra a month

Debt A: $1,200 at 11.9%, $30 minimum. Debt B: $6,800 at 23.9%, $170 minimum. Budget = 30 + 170 + 200 = $400 a month.

1. First month's interest: A is 1,200 × (0.119 ÷ 12) = $11.90; B is 6,800 × (0.239 ÷ 12) = $135.43.
2. Avalanche targets B, the 23.9% debt. A receives only its $30 minimum; B receives 170 + 200 = $370 plus whatever A's minimum frees up later.
3. Avalanche clears both in 25 months, with $1,987.36 of total interest.
4. Snowball targets A, the $1,200 debt, clearing it quickly for the psychological win — then rolls everything onto B.
5. Snowball clears both in 26 months, with $2,243.76 of interest — $256.40 more, and one month longer.

The default three-debt case

With $1,800 at 12.9%, $9,400 at 24.9% and $4,500 at 18.5%, plus $250 extra on a $643 monthly budget: avalanche clears everything in 33 months for $4,886.34 of interest; snowball takes 34 months and $5,783.63. Avalanche saves about $897 and one month. That is the honest size of the difference — real money, but smaller than the internet argument about it suggests.

Snowball or Avalanche: What the Difference Is Worth

Avalanche always wins on arithmetic. Paying the highest rate first minimises total interest, and no counter-example exists. The interesting question is whether it wins in practice.

The behavioural argument for snowball is that an early win keeps people going. There is published research suggesting people who clear a small balance first are more likely to stay with a payoff plan, and a plan you abandon at month eight costs far more than $897.

It is worth being precise about where the saving comes from. Avalanche does not pay more in total — both methods spend the same $643 every month. It simply directs that money at the balance accruing interest fastest, so less of each payment is swallowed before it touches principal. On the default scenario the 24.9% card is costing about $195 a month in interest alone at the outset, which is why attacking it first compounds in your favour.

A practical compromise: use snowball if you have one very small balance that will clear within two or three months, and avalanche for everything after that. You get the early win and most of the interest saving. The calculator lets you test that by running each method and comparing.

One more thing the table shows: both methods finish within a month of each other. The variable that actually decides the outcome is not the method — it is the extra payment. Raising the extra from $250 to $400 clears the same debts far faster than any ordering choice ever could.

Five Things Worth Knowing First

Five things worth knowing before you commit to a plan.

Keep a small buffer first. Throwing every spare pound at debt and then borrowing again when the car fails is a common and expensive loop. Most planners suggest a starter buffer of around one month's essential spending before the extra payment goes up. The emergency fund calculator sizes it.

Check for balance-transfer options. Moving a 24.9% balance to a 0% promotional card, even with a 3% transfer fee, usually beats any ordering strategy. Run the numbers again with the new rate and see.

Minimums fall as balances fall. Many card minimums are a percentage of the balance, so they shrink over time. This calculator holds them constant, which is conservative — it slightly understates how fast a real payoff accelerates.

New spending breaks everything. The simulation assumes no further borrowing on any of these accounts. Adding $200 a month of new card spending to the default scenario roughly doubles the payoff time.

Watch for promotional rates expiring. A 0% balance that reverts to 22.9% in four months should be treated as a 22.9% debt for planning purposes, not a 0% one. Enter the reversion rate if the promotion ends before the debt would clear.

Once the debts are gone, the budget you built does not have to disappear. Redirecting that $643 into the savings calculator at the same monthly figure is the single most effective thing most people can do with a completed payoff plan.