Debt Payoff Calculator
Find your fastest path to becoming debt-free.
Debt-Free In
3y 5m
Total Paid
$20,077.47
Total Interest
$5,077.47
Monthly Payment
$500.00
The Debt Payoff Formula
Each month, interest = balance × (annual rate ÷ 12), and whatever is left of your payment after that interest charge reduces the principal. The balance carries forward and the cycle repeats until it reaches zero — so a higher rate or a smaller payment means more of each check goes to interest instead of shrinking what you owe.
Paying $500.00/month on a $15,000.00 debt at 18% APR, you will be debt-free in 3 years and 5 months, paying $5,077.47 in interest — that's on top of the $15,000.00 you originally borrowed.
Tip: Increasing your payment by just $50.00/month could save hundreds in interest and shorten payoff by months, since every extra dollar skips interest entirely and goes straight to principal.
Frequently Asked Questions
What's the difference between the debt avalanche and debt snowball method?
The avalanche method pays extra toward whichever debt carries the highest interest rate first, while paying minimums on everything else — this saves the most money mathematically. The snowball method pays off the smallest balance first regardless of rate, which builds momentum and motivation. If you have a 22% credit card and a 6% car loan, avalanche tells you to crush the credit card first; snowball would tell you to pay whichever balance is smaller.
How much can extra payments actually save me?
A lot more than most people expect, because interest is calculated on whatever balance remains. On a $15,000 balance at 18% APR, paying $500/month instead of the $300 minimum can cut your payoff time by more than two years and save well over $2,000 in interest. Every extra dollar goes straight to principal, so it compounds in your favor instead of the lender's.
Why is the credit card minimum payment a trap?
Minimum payments are usually set at just 2-3% of the balance, which is barely more than the interest charged that month. On a $5,000 balance at 22% APR, a minimum payment of around $125 can take over 20 years to clear and cost more in interest than the original debt. Card issuers design minimums to keep you in debt as long as possible while still collecting a payment.
Does the interest rate or the balance size matter more?
Rate matters more, because it determines how fast the debt grows even while you're paying it down. A $3,000 balance at 24% APR can be more expensive to pay off than a $10,000 balance at 6% APR, because interest compounds faster on the higher rate. This is exactly why the debt avalanche method — targeting rate, not size — saves the most money.
Should I consolidate multiple high-interest debts into one loan?
Consolidation can help if the new loan's interest rate is meaningfully lower than the weighted average of what you're currently paying, and if it doesn't tempt you to run the old cards back up. Moving three credit cards averaging 24% APR into a single personal loan at 12% APR can cut your interest cost roughly in half. Watch for origination fees and balance transfer fees, which can eat into the savings.
What happens if I miss a payment?
Most lenders charge a late fee (often $25-$40) and may report the missed payment to credit bureaus after 30 days, which can drop your credit score significantly. Many credit card agreements also include a penalty APR clause that can push your rate above 29% after a single late payment. A missed payment doesn't just cost a fee — it can permanently raise your effective interest rate.
Should I pay off debt or invest first?
Compare your debt's interest rate to your expected investment return. Debt above 8-10% APR (most credit cards) is very hard to beat with typical market returns, so paying it off first is usually the better math. Lower-rate debt, like a 4% mortgage, can make sense to pay down slowly while investing extra cash, since long-term stock market returns have historically averaged higher than that.
How does this calculator work?
It takes your outstanding balance, annual interest rate, and fixed monthly payment, then simulates the payoff month by month: each month's interest is charged on the remaining balance, the rest of your payment reduces principal, and the cycle repeats until the balance hits zero. The result shows your payoff timeline, total interest paid, and a full month-by-month schedule.
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