Loan & Debt Payoff Calculator
Calculate how fast you can pay off credit cards, student loans, or any debt. See how extra payments save you thousands in interest.
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How Extra Payments Accelerate Debt Payoff
Every extra dollar you pay goes directly to principal, reducing the balance that accrues interest. On a $8,000 credit card at 22.99% APR, adding just $100/month extra saves over $3,000 in interest and pays off the debt 2+ years sooner. The return on extra payments equals your interest rate — guaranteed, risk-free, and tax-free.
The math is stark: a $5,000 balance at 20% APR with minimum payments takes over 30 years to pay off and costs more than $8,000 in interest. The same balance with $200/month payments is gone in 2.5 years with only $1,200 in interest. The difference is $6,800 — enough to fund a Roth IRA for a year.
Avalanche vs Snowball: Which Debt Payoff Method Is Better?
The avalanche method targets the highest-interest debt first, regardless of balance. This minimizes total interest paid and is mathematically optimal. If you have a 22% credit card and a 6% car loan, every extra dollar goes to the credit card first.
The snowball method targets the smallest balance first, regardless of interest rate. You get quick wins as small debts disappear, building momentum and motivation. Research from Harvard Business School found that the psychological boost from eliminating accounts actually helps people pay off more debt overall, even though they pay slightly more in interest.
The best method is the one you'll stick with. If you're disciplined and motivated by math, use avalanche. If you need early wins to stay on track, use snowball. Both are infinitely better than minimum payments.
Should I Pay Off Debt or Invest?
The rule of thumb: if your debt interest rate is above 7-8%, pay it off first. Credit cards at 20%+, personal loans at 12%+, and private student loans at 8%+ should all be prioritized over investing. No investment reliably returns 20% per year, but paying off a 20% credit card gives you exactly that.
Exception: always contribute enough to your 401(k) to get the full employer match, even while paying off debt. A 50% or 100% match is an instant guaranteed return that beats any debt payoff math. After capturing the match, direct all extra cash to high-interest debt.