Debt Payoff Calculator

When you have several debts, the order you attack them in changes how much interest you pay and how quickly you feel progress. Two methods dominate the advice, and they optimise for different things.

The avalanche method lists debts by interest rate and throws every spare dollar at the highest one first, paying minimums on the rest. Mathematically it always wins: the highest rate is where your money is losing value fastest, so retiring it first saves the most interest over the whole payoff period. If you have a credit card at twenty-three per cent and a car loan at six, the card is the clear target.

The snowball method lists debts by balance and clears the smallest first, regardless of rate, then rolls the freed-up payment into the next smallest. It costs slightly more in interest, sometimes dramatically and sometimes barely at all, but it produces a completed payoff early, and that psychological win is the entire point. Behavioural research on real borrowers has repeatedly found that people using the snowball are more likely to stick with the plan and actually reach zero, because they see a balance disappear within months rather than years.

The practical answer for most people is to accept the small interest penalty and use whatever order keeps you going. The difference between the two methods depends on how spread out your rates and balances are: if your highest-rate debt is also your smallest, both methods agree and the question evaporates. If your smallest debt carries a low rate while a large debt carries a punishing one, the avalanche saves meaningfully more, and the choice becomes real.

Whatever order you choose, two things matter more than the ordering. Pay a fixed total amount every month rather than a shrinking minimum, and stop adding to the balances — a payoff plan undermined by new spending is not a plan. If the numbers show you cannot reach zero at any realistic payment, or you are considering using retirement savings, talk to a non-profit credit counsellor before acting. This calculator gives estimates, not financial advice; your statements are authoritative.

This calculator returns estimates for general information only. It is not financial, investment, tax or legal advice, and it cannot replace guidance from a qualified professional who knows your circumstances. Figures such as loan payments, investment growth and retirement projections are simplified models based on the inputs and assumptions you provide, not guarantees of future results.