Debt Payoff Calculator

Each month: interest is charged on each remaining balance at its own monthly rate, each debt pays its own minimum, and whatever is left of the monthly pool — the two minimums plus the extra — goes entirely to the debt the chosen order puts first. The pool is recomputed every month, so when one debt clears, its minimum joins the money being pushed at the other.

B₁

Balance on the first debt

B₂

Balance on the second debt

r₁

Annual rate on the first debt, divided by twelve each month

r₂

Annual rate on the second debt, divided by twelve each month

s₁

Minimum payment on the first debt

s₂

Minimum payment on the second debt

x

The extra money added to the pool each month

n

Months until both balances reach zero

Use it when you have more than one debt and a fixed amount of extra money, which is exactly the situation where the choice exists at all. The first thing the page tells you is whether the question is worth asking: if the extra payment is zero, or the two rates match, or the two balances match, the two orders come out identical and you can stop worrying about it. The second thing is the value of the choice when it does exist. On the default numbers the avalanche order is worth 298.56 and one month; on others it is worth more, and on some it is worth nothing who can tell in advance without running it. The third thing, and the one people forget, is what the extra payment itself is worth. Compare the first example with the third: keeping the 150 a month is worth 27 months and 3,337.31 of interest on these debts, against 298.56 for the cleverer order. Finding the extra money matters roughly ten times more than deciding where to send it. The fourth thing is the shape of the payoff rather than its length: the snowball order clears the first debt in month 14 and the avalanche order clears one in month 30, and if a cleared account has real value to you — a card you can stop worrying about, a credit line that reopens — that is a legitimate reason to choose the order this page measures as slightly worse.

1. 8,000 at 22% and 3,000 at 15%, with 150 extra, paid highest rate first

   1. The pool each month is 200 + 100 + 150 = 450
   2. Month one: interest on the 8,000 is 146.67 and on the 3,000 is 37.50
   3. Each debt pays its own minimum, leaving 150 to push at the 22% balance
   4. The 22% balance falls fastest, and it is cleared in month 30
   5. From month 31 the pool no longer has to cover its minimum, so the whole 450 goes at the 15% balance
   6. Both are cleared in month 32, with 3,217.13 of interest paid
   7. Run the same pool against the smaller balance first and the total becomes 3,515.69 over 33 months

   The default case, and the one that makes the trade look simple: 298.56 and one month for choosing the higher rate first. Note why the difference is not larger — both orders finish within a month of each other, 32 against 33, so the ordering only changes which balance is shrinking during the middle years. It is a real saving and it is not a transformation, which is why the page prints both rows rather than recommending one.

2. The same debts and the same 150, paid smallest balance first

   1. Same pool of 450 a month, directed at the 3,000 balance instead
   2. The 3,000 balance is cleared in month 14, which is the visible win of this order
   3. Its 100 minimum then joins the pool, so 450 a month is aimed at the 22% balance from month 15
   4. The 8,000 balance is cleared in month 33, one month later than the avalanche order
   5. Total interest: 3,515.69 against 3,217.13, so 298.56 more

   Two figures worth reading here. The first is 14: a debt actually gone, two and a half years before the other order manages it, and that is not a trivial thing — it changes how the plan feels every month for the next two years. The second is the arithmetic of that feeling, which is 298.56 and one month. Both numbers are true at once, and which one weighs more is a judgement about you rather than about the debts, which is why this page does not make it.

3. The same two debts with nothing extra to direct

   1. The pool is 200 + 100 = 300, and every penny of it is already committed to a minimum
   2. There is nothing left over to direct anywhere
   3. Each debt therefore runs on its own minimum, and each clears when its own schedule finishes
   4. The 3,000 balance clears in month 38, the 8,000 in month 59
   5. Both orders give 6,554.44 of interest, because neither ever gets to change what happens

   The zero, and it is the most useful row on the page for anyone deciding whether to think about this at all. With no extra money, the order changes nothing about the cost — the difference is exactly 0, not approximately 0 — because every penny is already spoken for by a minimum payment. What it does still change is which debt clears first, and here that is the 3,000 in month 38. Compared with the first example, the missing 150 a month is worth 27 months and 3,337.31 of interest, which is the number to act on first.

Two debts is a limit, not the natural size of the problem — real people often have three to five. The conclusion is already complete at two, which is why the page stops there, but the cost is that you have to combine the others yourself: merge any debts with similar rates and merge the smallest ones together until two remain, and accept that the result is an approximation of your real payoff. The minimum payments are treated as fixed, while on a credit card the minimum is a percentage of the balance and falls as the balance falls — so the real schedule is slower than this one and the case for an extra payment is stronger than it appears here. Interest is charged monthly at the annual rate divided by twelve, while a real card accrues daily and, once you are revolving, from each purchase's transaction date, which makes a card balance slightly more expensive than modelled. New spending is absent, and a card you keep using cannot be repaid at all, only serviced. The extra payment is assumed to arrive every month without fail, and it is assumed to be genuinely extra — if covering it means borrowing elsewhere or missing a payment on something else, the arithmetic here stops describing your situation. Any minimum that does not cover its own interest makes the whole thing unsolvable, and the page will say so rather than return a number. Transfers and balance transfer fees are absent, as is the effect of clearing a card on your credit score, which is one of the real reasons people choose the snowball order. And nothing here is in any currency.

Is the avalanche method or the snowball method better?

The avalanche order always costs the same or less in interest, because paying the highest rate first is what minimises it. On 8,000 at 22% and 3,000 at 15% with 150 extra, it saves 298.56 and one month. The snowball order clears a debt 16 months sooner, and whether that is worth 298.56 is your call rather than an arithmetic one.

When does the payoff order stop making any difference?

When there is no extra money to direct, or when the two rates are equal, or when the two balances are equal. In all three cases the two orders produce exactly the same total interest — not approximately, exactly — because the leftover each month is zero, or because both orders pick the same debt. The third example above is the first of those. The month you are finally debt free can still differ; what does not differ is the cost.

Why does the monthly pool get bigger partway through?

Because when one debt is cleared its minimum is no longer needed there, and the money joins whatever is being pushed at the remaining balance. In the first example the pool is 450 from the start, but from month 31 the 15% debt is the only one left, so the whole 450 goes at it and it finishes in two months.

Should I pay off the smallest balance first instead?

Sometimes, and the reason is behavioural rather than mathematical. Clearing a debt in month 14 rather than month 30 keeps a plan going, and a plan you finish beats an optimal plan you abandon. The page measures the cost of that choice — 298.56 and one month here — so you can decide with the number in front of you rather than guessing at it.

What is worth more, finding extra money or picking the right order?

Finding the money, by a wide margin. On these debts, ordering them optimally saves 298.56, while the 150 a month itself saves 3,337.31 and 27 months. If you can only do one of the two, put the effort into the extra payment and use whichever order you will actually stick to.

Can I use this with more than two debts?

Not directly — the page takes two. Combine debts with similar rates into one figure and merge the smallest balances together until two are left, then run it. The answer will be close rather than exact, because the real schedule pays off several small debts at once rather than one.

• 12 CFR 1026.7 — Periodic statement (Regulation Z): what a credit card statement must disclose, including the minimum payment and the minimum payment warning those minimums are built from — Electronic Code of Federal Regulations, Office of the Federal Register (United States)
• G.19 Consumer Credit: the monthly series on credit card interest rates and revolving balances, which is where the rates on both debts come from — Board of Governors of the Federal Reserve System (United States)