Which debt should I pay off first?

The avalanche method (highest interest rate first) saves the most money mathematically. The snowball method (smallest balance first) provides psychological wins that keep you motivated. Both work; choose what keeps you consistent.

Should I consolidate my debts?

Consolidation can help if you get a lower interest rate and it simplifies payments. However, it does not reduce the principal and extending the term can cost more in total interest. Avoid consolidation that turns unsecured debt into secured debt.

Is it better to save or pay off debt?

Pay off high-interest debt (above 6-7%) first, as no savings account can match the guaranteed return of eliminating an 18% credit card balance. Keep a small emergency fund to avoid taking on new debt.

How do minimum payments trap you?

Credit card minimum payments are usually 1-3% of the balance. At minimum payments, an $8,000 balance at 18% APR would take over 30 years to pay off and cost over $15,000 in interest.

Will paying off debt hurt my credit score?

Paying off debt generally helps your credit score by lowering your credit utilization ratio. Closing old accounts can slightly lower your score by reducing average account age, but the overall impact of less debt is positive.

Debt Payoff Calculator

See exactly how long it takes to pay off your debt — and how much extra payments save you.

Debt Payoff Calculator

Find out when you will be debt-free

Calculate time to pay off debt

Debt Balance ($)

Interest Rate (%)

Monthly Payment ($)

Formula

n = -log(1 - Br/PMT) / log(1+r)

What Is a Debt Payoff Calculator?

A debt payoff calculator tells you exactly how many months it will take to eliminate a balance given a fixed monthly payment and an annual interest rate. Whether you're dealing with a credit card, a personal loan, or a car note, this tool cuts through the confusion and shows you a clear finish line. Knowing your payoff date transforms debt from an abstract burden into a solvable problem with a specific end date.

Making only minimum payments is one of the costliest financial habits you can have. On a $8,000 credit card at 20% APR, a minimum payment strategy can keep you in debt for over 20 years and cost more than $10,000 in interest alone. Even a small fixed payment above the minimum can slash years off your timeline. This calculator shows you the precise impact of any payment amount — and what happens when you throw in extra principal each month.

How to Use This Calculator

1Enter your current balance — the total amount you owe right now.
2Enter your annual interest rate (APR). Check your statement or lender's website if you're unsure.
3Enter your fixed monthly payment. Use a number higher than the minimum to see how quickly you can be debt-free.
4Optionally, enter an extra monthly payment to see how much faster you pay off the debt and how much interest you save.

Payoff Formula Explained

n = -log(1 − (r × P) / M) / log(1 + r)

n = months to payoff
P = principal balance (current amount owed)
r = monthly interest rate (APR ÷ 12)
M = monthly payment amount
Total Interest = (M × n) − P

P is your starting balance; r is the APR divided by 12 (e.g., 19.99% APR → r = 0.01666); M is your fixed monthly payment; n is the number of months until the balance reaches zero. One critical constraint: M must be strictly greater than r × P — the monthly interest charge. If your payment equals or is less than the monthly interest, your balance never decreases (negative amortization). Total interest is simply the sum of all payments minus the original principal.

Real-World Examples

Example 1 — Credit Card: $8,000 at 19.99% APR, $200/month

Monthly rate r = 19.99% ÷ 12 = 1.666%. Plugging into the formula: n = −log(1 − (0.01666 × 8000) / 200) / log(1.01666) ≈ 62 months (about 5 years, 2 months). Total payments = $200 × 62 = $12,400. Total interest paid ≈ $12,400 − $8,000 = $4,400. Boosting the payment to $300/month cuts the timeline to about 34 months and saves roughly $1,800 in interest.

Example 2 — Car Loan: $15,000 at 6.9% APR, $350 vs $500/month

At $350/month: n ≈ 51 months, total interest ≈ $2,850. At $500/month: n ≈ 34 months, total interest ≈ $2,000. Paying $150 more per month saves about 17 months and $850 in interest. On a car loan the savings are more modest than a credit card because the interest rate is much lower — but the time savings alone may be worth it if you want to own the vehicle outright sooner.

Example 3 — Student Loan: $25,000 at 5.5% APR, $300 + $100 extra/month

At $300/month alone: n ≈ 116 months (nearly 10 years), total interest ≈ $9,800. Adding $100 extra (effective payment $400/month): n ≈ 80 months (just under 7 years), total interest ≈ $7,000. That extra $100 per month saves 36 months and approximately $2,800 in interest — a strong return on a modest increase in monthly commitment.

Frequently Asked Questions

What's the difference between the debt avalanche and debt snowball methods?▾

The debt avalanche orders your debts from highest to lowest interest rate and attacks the highest-rate balance first. Mathematically, it minimizes total interest paid. The debt snowball orders debts from smallest to largest balance and pays off the smallest first, regardless of rate. It generates quick wins that keep you motivated. Research shows that for many people, the psychological momentum of the snowball method leads to better real-world outcomes even if it costs slightly more in interest.

Should I pay off debt or invest my extra money?▾

The math favors whichever option has the higher after-tax rate. If your credit card charges 20% interest, paying it off is a guaranteed 20% return — almost impossible to beat in the market. If your student loan is at 4.5% and your employer matches 401(k) contributions, capture the full match first (that's a 50–100% instant return), then direct extra cash toward high-interest debt. As a rule of thumb: pay off any debt above 7–8% APR aggressively before investing beyond an employer match.

What happens if I miss a payment?▾

Missing a payment triggers late fees (typically $25–$40), may cause a penalty APR on credit cards (often 29.99%+), and will be reported to credit bureaus after 30 days, damaging your credit score. The higher penalty rate extends your payoff timeline significantly — recalculate immediately with the new rate so you can see the full impact and adjust your plan.

Are balance transfer cards worth it for paying down debt?▾

A 0% APR balance transfer offer can be very effective if you can pay off the balance before the promotional period ends (typically 12–21 months). Every dollar you pay during the promo period goes entirely to principal — no interest drag. The risk: if you don't pay it off in time, the go-to rate is often high (20%+), and there's usually a transfer fee of 3–5% of the balance. Use this calculator to check whether you can realistically clear the balance within the promo window.

How does credit card debt affect my credit utilization and score?▾

Credit utilization — the ratio of your credit card balances to your total credit limits — accounts for roughly 30% of your FICO score. Utilization above 30% starts to hurt your score; above 50% it hurts significantly. Paying down balances directly improves utilization and your score, sometimes within a single billing cycle. Aim for under 10% utilization for the best score impact.