Debt Payoff Calculator
See how extra payments can help you become debt-free faster and save thousands in interest. Enter your total debt, interest rate, and how much extra you can pay each month. This calculator shows you exactly when you will be debt-free and how much you will save compared to minimum payments only.
How We Calculate This
This calculator uses standard compound interest formulas to simulate debt payoff over time. Monthly interest is calculated on the remaining balance, and payments are applied with interest deducted first, then principal.
Frequently Asked Questions
What is the debt avalanche method?
The avalanche method prioritizes paying off debts with the highest interest rates first. After making minimum payments on all debts, you put extra money toward the highest-rate debt. This minimizes total interest paid and is mathematically optimal.
What is the debt snowball method?
The snowball method prioritizes paying off the smallest balances first. After making minimum payments, you put extra money toward the smallest debt. While you may pay more interest overall, the quick wins can provide motivation to stay on track.
Which payoff method should I use?
If you want to save the most money, use the avalanche method. If you need psychological wins to stay motivated, the snowball method may work better. Both methods are far better than paying only minimum payments.
How much extra should I pay?
Any extra amount helps. Even $50-100 extra per month can save thousands in interest and years of payments. Look at your budget for areas to cut temporarily, or consider ways to increase income specifically for debt payoff.
Should I pay off debt or invest?
Generally, pay off high-interest debt (above 7-8%) before investing beyond an employer 401k match. The guaranteed return of paying off 18% APR debt is hard to beat. For lower-rate debt, you might invest simultaneously.
What if I can only afford minimum payments?
Focus on reducing expenses or increasing income. Consider balance transfer cards with 0% intro rates, debt consolidation loans, or negotiating with creditors. Even small extra payments help accelerate payoff.
How does compound interest work against me with debt?
When you carry a balance, interest compounds on the total amount owed. If you only make minimum payments, you are mostly paying interest while the principal barely decreases. This is why debt can take decades to pay off.
Will paying off debt improve my credit score?
Yes, reducing your credit utilization (debt relative to credit limits) is one of the fastest ways to improve your credit score. Keeping utilization below 30%, and ideally below 10%, can significantly boost your score.
Related Calculators
You might also find these calculators helpful: Credit Card Payoff Calculator, Student Loan Calculator, and Savings Rate Calculator.
This calculator provides estimates for educational purposes only. Actual payoff times may vary based on your specific loan terms, payment timing, and any changes to interest rates or payments.