OneTaskBy Tim King · Updated
Debt Payoff Calculator
Snowball or Avalanche Payoff Order, Months to Debt-Free and Total Interest
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How the Debt Payoff Calculator works
This debt payoff calculator builds a plan for clearing several debts at once. List each debt with its balance, interest rate and minimum payment, add any extra you can pay each month, and choose the avalanche or snowball method to see your debt-free date, total interest and the order debts are cleared.
Debt payoff calculator formula
Each month every debt is charged interest at its rate ÷ 12 and gets its minimum payment. The debt payoff calculator sends the extra, plus the minimums of any debts already cleared, to one target debt:
Balance next month = balance × (1 + rate ÷ 12) − payment
Avalanche targets the highest rate first, which minimises interest. Snowball targets the smallest balance first, which clears whole debts sooner and can help motivation. Freed-up payments roll on to the next target.
Worked example: avalanche
A credit card of 6,000 at 24% with a 150 minimum, a car loan of 2,000 at 6% with 100 and a personal loan of 9,000 at 11% with 250, plus 200 extra a month. Avalanche clears the credit card, then the car loan, then the personal loan, in 2 years 5 months with 3,136.10 of interest.
Worked example: snowball
The same debts with the snowball method clear the car loan first, then the credit card, then the personal loan, in 2 years 6 months with 3,433.19 of interest. Paying only the minimums would take 3 years 11 months and cost 6,054.31, which shows how many months a steady extra payment saves.
Debt payoff reference table
Months and interest to clear a 5,000 debt at 20% with fixed monthly payments from 100 to 600.
| Monthly payment | Months | Time to clear | Interest paid |
|---|---|---|---|
| 100.00 | 109 | 9 years 1 month | 5,840.10 |
| 125.00 | 67 | 5 years 7 months | 3,308.32 |
| 150.00 | 50 | 4 years 2 months | 2,359.09 |
| 175.00 | 40 | 3 years 4 months | 1,846.16 |
| 200.00 | 33 | 2 years 9 months | 1,522.10 |
| 225.00 | 28 | 2 years 4 months | 1,297.34 |
| 250.00 | 25 | 2 years 1 month | 1,133.03 |
| 275.00 | 22 | 1 year 10 months | 1,006.53 |
| 300.00 | 20 | 1 year 8 months | 906.81 |
| 325.00 | 18 | 1 year 6 months | 825.38 |
| 350.00 | 17 | 1 year 5 months | 758.78 |
| 375.00 | 16 | 1 year 4 months | 702.07 |
| 400.00 | 15 | 1 year 3 months | 653.73 |
| 425.00 | 14 | 1 year 2 months | 612.29 |
| 450.00 | 13 | 1 year 1 month | 576.29 |
| 475.00 | 12 | 1 year 0 months | 544.31 |
| 500.00 | 12 | 1 year 0 months | 515.22 |
| 525.00 | 11 | 0 years 11 months | 490.87 |
| 550.00 | 10 | 0 years 10 months | 467.31 |
| 575.00 | 10 | 0 years 10 months | 447.71 |
| 600.00 | 10 | 0 years 10 months | 428.10 |
Quick answers
- Avalanche always costs the same or less interest than snowball.
- Snowball clears the first whole debt sooner.
- A payment below the monthly interest never clears the debt.
- 5,000 at 20% needs over 83 a month just to cover interest.
- Rolling freed-up minimums on to the next debt speeds everything up.
FAQ
Is avalanche or snowball better?
Avalanche saves the most interest because the most expensive debt goes first. Snowball can cost a little more but gives quick wins by closing accounts early. The best method is the one you will stick with, and the gap is often small.
What happens if my payment is too low?
If a debt's payment is less than its monthly interest, the balance grows and it can never be cleared. The calculator flags this. Raise the minimum or the extra amount until every debt's balance starts to fall.
Should I include my mortgage?
Usually not. Mortgages are long, low-rate debts and would dominate the plan. Most people use a debt payoff plan for credit cards, overdrafts, car loans and personal loans, and treat mortgage overpayments separately.
Does the calculator include new spending?
No. It assumes no new charges are added to the debts. If you keep using a credit card, the real payoff date will be later, so stop adding to the balances you are trying to clear.
See also: all Debt tools, Pay, Bills, Property, Investing, Saving.
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