Debt Payoff Calculator

The avalanche method directs all extra payment to the debt with the highest interest rate while paying minimums on the rest. As each debt is cleared, that payment rolls onto the next-highest-rate debt. This is mathematically optimal — it minimizes total interest paid and gets you out of debt fastest.

The snowball method pays the smallest balance first, regardless of rate. Mathematically inferior to avalanche (often by a few hundred to a few thousand dollars), but behavioral research has consistently found that people who use the snowball method are more likely to stick with the plan to completion. The early wins — clearing a debt in months instead of years — produce momentum that pure interest math doesn't.

Pick the method that you will actually finish. If you're confident in your follow-through, avalanche is cheaper. If you've started and abandoned debt-payoff plans before, snowball's psychology is genuinely worth the higher interest cost.

Credit-card minimum payments are typically 1–3% of the balance, with a $25–$40 floor. At a 22% APR, paying only the minimum on a $5,000 balance can take 20+ years to pay off and cost $7,000–$8,000 in interest — more than the original balance. The minimum is designed to keep the debt revolving, not to retire it.

Adding even a modest fixed amount on top of the minimum dramatically changes the timeline. $50/month extra on that $5,000 balance can cut payoff to about 6 years and save thousands in interest. The leverage of any extra payment is largest when the rate is highest.

A 0% balance-transfer card moves credit-card debt to a card with a promotional 0% rate for 12–21 months. If you can pay off the full balance during the promo period, this can save hundreds in interest. Watch for: the transfer fee (typically 3–5% of the balance), the post-promo rate (often 20%+), and the discipline to not run up new debt on the old cards.

A debt consolidation loan converts multiple revolving debts into one fixed installment loan, ideally at a lower rate. This works well for borrowers with good credit consolidating high-rate cards into a 6–10% personal loan. It can fail badly if the borrower then re-runs the credit cards back up — a common pattern that doubles the original problem.

Two prerequisites: a small starter emergency fund (often $1,000–$2,000) so a flat tire or a copay doesn't push you onto a credit card, and capturing any employer 401(k) match (a 50% match is a 50% return that beats almost any debt payoff). Beyond those, route every available dollar into the chosen payoff strategy until high-rate debt is gone.

Once debts above ~7–8% are cleared, the math becomes ambiguous: paying down 5% debt vs. investing in a diversified portfolio is a near-tie at long horizons. Below 4–5%, investing typically wins by a clear margin.