US Debt payoff calculator

How debt-payoff strategies are calculated

Both methods make the minimum payment on every debt each month, then put any extra dollars toward exactly one debt at a time. The methods differ only in which debt to target first.

Snowball method

Target the debt with the smallest balance first. Once it's paid off, roll its entire payment (minimum + extra) into the next-smallest debt, and so on. Each payoff frees up cash for the next, building momentum.

Avalanche method

Target the debt with the highest interest rate first, regardless of balance. Once it's paid, move to the next-highest rate. This minimises total interest paid.

Which is better?

Avalanche always pays less total interest — sometimes by hundreds, sometimes by thousands. The math is unambiguous.

But a widely-cited Kellogg School study (Gal & McShane, 2012) found people on the snowball method were significantly more likely to stay on plan and become debt-free. Early payoffs create motivation that compounds — and a slightly more expensive plan you complete beats an optimal plan you abandon.

The calculator above shows the exact dollar difference between the two for your debts. If avalanche only saves a few hundred dollars, take snowball — the motivation is worth more than the math. If avalanche saves $1,000+, the math probably wins.

Worked example

Three debts, $200/month extra payment:

• Credit card A: $1,500 @ 24% APR, $50 minimum
• Credit card B: $4,000 @ 19% APR, $80 minimum
• Personal loan: $8,000 @ 12% APR, $200 minimum

Both methods happen to target the same order — credit cards tend to have higher rates and smaller balances. When debt sizes and rates align, the strategies converge.

Pay off debt or invest?

General rule: pay off debt with an interest rate higher than your expected after-tax investment return (typically anything above 6–7%). Lower-rate debt — most mortgages, federal student loans — can usually be carried while investing. Always capture employer 401(k) match first; that's a guaranteed 50–100% return that beats almost any debt rate.

Common mistakes

• Putting all extra dollars on the highest-interest debt while running up other balances. Stop using credit while paying off debt.
• Skipping the emergency fund. A $500–$1,000 buffer prevents a single surprise from sending you back to credit cards.
• Refinancing into a longer term to lower the monthly payment. Usually increases total interest.
• Forgetting balance transfer offers. A 0% intro APR card or consolidation loan at a lower rate can dramatically accelerate payoff — when used with discipline.

What this calculator doesn't cover

• Debt settlement, consolidation loan fees, balance transfer fees
• Tax implications of debt forgiveness or discharge
• Credit score impact of payoff strategies
• Variable interest rates (treated as fixed at the current rate)