Debt Payoff Calculator

How this calculator works

The calculator runs your debts through twelve simulated months a year, and repeats until every balance reaches zero. Each month it does four things in the same order a lender does:

1. Adds one month of interest to every outstanding balance, at that debt's own rate
2. Pays every minimum, so nothing falls into arrears
3. Sends the entire surplus to one target debt
4. When a debt clears, adds its freed-up minimum to the surplus for the following month

That fourth step is the one people leave out when they work this through by hand, and it is where most of the acceleration comes from. It is also why both methods finish far sooner than a spreadsheet of fixed payments suggests.

The only difference between the two methods is which debt gets the surplus in step three.

• Avalanche targets the highest interest rate first, regardless of size
• Snowball targets the smallest balance first, regardless of rate

Everything else is identical, which is why the comparison is fair.

Reading the result

Three figures are worth attention, and they are not equally important.

The gap between the two methods is usually smaller than the debate about them suggests. In many portfolios the smallest balance is also the highest rate, because small revolving accounts tend to be the expensive ones, and the two methods then agree completely for the first stretch.

Where they genuinely diverge is when you hold one large balance at a high rate alongside several small cheap ones. Snowball leaves the expensive debt untouched while clearing the cheap ones, and that is where avalanche's advantage becomes real money rather than a rounding difference.

What the calculator assumes

Every model makes assumptions, and yours will differ from these in at least one way. The ones that matter:

• Rates stay fixed. Most credit card rates are variable and move with the central bank rate. A rise makes both methods slower.
• Minimums stay fixed. In reality, most card minimums are a percentage of the balance, so they fall as the balance falls. That makes real repayment slower than modelled unless you hold the payment steady yourself — which is exactly what you should do.
• You add nothing to the balances. Any method applied to a card you are still spending on is a treadmill.
• You never miss a payment. A missed payment can trigger a penalty rate and undo months of progress.
• Interest is applied monthly. Credit cards actually compound daily on an average daily balance, so real interest is marginally higher than shown here. The difference is small and does not change which method wins.

The last point deserves a note: this tool is for comparing two strategies, not for reconciling a statement to the penny. If you want the exact daily-balance mechanics, how credit card interest is calculated works through them.

Which method should you actually choose?

The honest answer is that the arithmetic favours avalanche and the evidence on human behaviour is more mixed, and the size of the gap decides how much that tension matters.

Use avalanche if the calculator shows a meaningful gap — say more than a few hundred in interest, or more than a couple of months. That is real money for no extra effort beyond ordering a list differently.

Use snowball if the gap is small and you have previously abandoned a repayment plan. Clearing an account entirely produces a visible result, one fewer payment to track, and a genuine sense that the thing is working. A method you continue with beats a mathematically superior one you quit in month four.

Use a hybrid if you have one very small balance. Clear anything that disappears within a month or two, whatever its rate, then switch to strict avalanche for the rest. This captures most of snowball's early momentum and most of avalanche's long-run saving.

Try it: set the extra payment to what you can genuinely afford and look at the gap. If the two methods are within a rounding error, stop deliberating and start paying.

The number that matters more than the order

Change the extra monthly payment and watch both results move. Then change the order and watch how little moves by comparison.

For most portfolios, doubling the extra payment does far more than picking the better method. The ordering decision is worth a few percent; the amount is worth years. If you take one thing from this tool, it should be that the strategy debate is a distraction from the size of the monthly figure.

That said, the extra payment is not always the easiest lever. Two others are often available:

• Lower the rate. A balance moved to a 0% promotional window stops accruing entirely for the length of the offer. Whether the transfer fee is worth it is worked through in how balance transfers actually work.
• Consolidate at a lower rate, which does the same thing without a deadline, though it usually raises your debt-to-income ratio because a loan has a required payment where a card had a smaller minimum. See debt-to-income ratio explained.

Making it actually happen

The plan fails in predictable ways. These four steps prevent most of them:

1. Set every debt to autopay its minimum. This means no ordering strategy can ever cause a missed payment on a debt you are not currently targeting. It is the single most important step.
2. Send the surplus as a separate scheduled payment to the target debt. Bundled into a general payment, it can be absorbed or reallocated by the lender.
3. When a debt clears, immediately increase the payment on the next target by the amount you were paying on the one that finished. This is the rollover the calculator models, and it is the part that quietly stops happening in real life.
4. Do not close the cleared accounts. Closing a card removes its limit and raises your utilisation on everything else, which can dent your credit score at exactly the moment you have earned an improvement. Credit utilisation explained covers why.

When the calculator says the debts never clear

If you see the warning that the payments never clear the balances, it means the interest being added each month is outrunning the payments being made. This is not a modelling artefact; it is a real state that people are genuinely in, and it does not resolve by trying harder.

The realistic options at that point are to increase the total payment, reduce the interest rate through a transfer or consolidation, or seek help. Non-profit credit counselling services exist in both the UK and the US and can often negotiate rates directly with lenders. A debt that mathematically cannot be repaid at the current payment is a situation to get advice on, not to budget harder against.

A worked example of the gap

To see when the choice actually matters, try these two portfolios in the calculator above.

Portfolio one — the methods agree. A 900 store card at 26.99%, a 6,200 credit card at 22.99%, a 4,500 loan at 12.99%, a 9,400 car loan at 7.49%. The smallest debt is also the most expensive, so both methods start in the same place and the totals finish close together. Here the debate is genuinely academic.

Portfolio two — the methods diverge. Change the credit card to 15,000 at 24.99% and leave everything else. Now snowball clears three small cheap debts while the largest, most expensive balance compounds untouched for years. The gap widens into real money, and avalanche becomes the clear answer.

The lesson is that you cannot know which case you are in without entering your own figures. General advice about avalanche and snowball is answering a question that only your balances can settle.

Why the payoff order changes as you go

Watch the payoff order in the results panel. Under avalanche it is fixed at the outset, because interest rates rarely change. Under snowball it is also fixed, because it depends only on today's balances.

But in real life the order can shift. A variable rate rising, a promotional window ending, or a new balance appearing all change which debt deserves the surplus. It is worth re-running this once or twice a year, or whenever a rate changes, rather than setting an order in year one and following it blindly to the end.

The one time you should definitely re-run it is when a 0% promotional period is due to expire. A balance sitting quietly at 0% is the cheapest debt you have right up until the day it becomes one of the most expensive.

Sharing your figures

The Copy link button puts your numbers into the page address itself, so you can bookmark a plan, send it to a partner, or paste it into a forum reply and have the other person see exactly what you see.

Nothing about that involves us. The figures travel in the link, in your browser, and never reach a server here. That is true of this whole tool: you can disconnect from the internet after the page loads and every calculation still works.