Debt Payoff Calculator
See exactly when you'll be debt-free and how much interest you'll pay.
Two proven strategies for paying off debt
If you have multiple debts, the order you pay them off matters. Not because it changes the math on any single debt, but because freeing up cash from paid-off debts lets you attack the remaining ones harder. The two main approaches are the avalanche and snowball methods — both work, and they work better than making minimum payments on everything, which is how most people inadvertently maximize the interest they pay.
Before choosing a strategy, list every debt with its balance, minimum payment, and interest rate. That list is where both strategies start.
The avalanche method: mathematically optimal
Pay minimums on everything. Put any extra money toward the highest-interest debt first. When that's paid off, roll that payment toward the next highest-rate debt. Repeat.
The math is simple: eliminating your highest-rate debt first reduces the total interest you pay over the life of your debt payoff. On paper, this is always the correct answer. On a $10,000 credit card at 24% and a $15,000 personal loan at 10%, paying off the credit card first saves more interest than any other sequence.
The downside is psychological. High-interest debts are sometimes also the largest balances, meaning you might be paying on the same debt for a long time before it disappears. That can feel discouraging. If motivation isn't an issue for you, avalanche wins.
The snowball method: psychologically powerful
Pay minimums on everything. Put extra money toward the smallest balance first, regardless of interest rate. When it's gone, roll that freed payment toward the next smallest balance.
The benefit is wins. Paying off a $800 medical bill in month 2, then a $1,400 credit card in month 5, then a $2,500 personal loan in month 8 — those completed payoffs provide real momentum. Research by behavioral economist Richard Thaler and others shows that for many people, the snowball method leads to faster total debt elimination in practice because people stick with it.
The math says you'll pay slightly more in interest than the avalanche method. But paying off debt in 3 years on a plan you can follow beats paying it off in 4 years on an "optimal" plan you abandon in month 6.
How much extra payment actually matters
Even modest extra payments make a disproportionate difference because they go entirely toward principal, which reduces every future interest charge. On a $12,000 credit card at 22% with a $300 minimum payment:
- Minimum only: ~7 years, ~$9,800 in interest
- +$50/month ($350 total): ~5 years, ~$7,100 in interest — saving $2,700
- +$100/month ($400 total): ~4 years, ~$5,700 in interest — saving $4,100
- +$200/month ($500 total): ~2.5 years, ~$3,600 in interest — saving $6,200
The extra $200/month in the last scenario saves over $6,000 in interest — a 30:1 return on the extra effort. Few financial moves have that kind of guaranteed impact.
What to do if you can't make minimum payments
Call your creditors before you miss a payment, not after. Most credit card issuers have hardship programs — temporary interest rate reductions, payment deferrals, or waived fees — but they're not advertised. You have to ask. These programs are genuinely available and banks prefer you paying something over defaulting.
Nonprofit credit counseling agencies (look for NFCC-member agencies) offer Debt Management Plans (DMPs) — they negotiate reduced interest rates with your creditors and you make a single monthly payment to the agency. Cost is typically $25–75/month. This is different from for-profit debt settlement companies, which are often predatory and damage your credit severely.
Debt consolidation: when it helps and when it doesn't
Debt consolidation means combining multiple debts into one loan with (ideally) a lower interest rate. It makes sense when you can genuinely get a lower rate and have the discipline to not accumulate new debt on the freed-up cards.
Common consolidation options:
- Balance transfer credit card (0% intro APR): Best option if you can pay the balance within the promotional period (usually 12–21 months). Transfer fee is typically 3–5%. Don't use the old cards again.
- Personal loan: Fixed rate, fixed term. A 10% personal loan to pay off 22% credit cards saves real money — just do the math on fees and make sure you qualify for the lower rate.
- Home equity loan/HELOC: Lower rates (currently 7–9%), but you're converting unsecured debt to debt secured by your house. Missing payments could cost you your home. Use carefully.
What doesn't work: consolidating debt and then charging the paid-off credit cards again. This is how people end up with both the consolidation loan and new card balances — total debt increases, not decreases. Cut up or freeze the cards if you can't trust yourself not to use them.
As of 2026, the average credit card APR in the US is 24.37% — a record high. At this rate, $8,000 in debt with minimum payments costs over $15,000 in total interest.