The debt payoff calculator models each debt separately, then simulates the plan month by month. That matters because balances, APRs, and minimum payments do not all behave the same way.
Monthly interest
Annual percentage rates are converted into monthly rates. Each balance accrues interest, then receives its required minimum payment. Any extra payment is then directed according to the selected strategy.
Avalanche versus snowball
The avalanche method sends extra money to the highest APR first. The snowball method sends it to the smallest balance first. The model keeps paying minimums on every other debt so the comparison reflects a workable real-life plan.
What happens after one balance is cleared
When a debt reaches zero, its former payment becomes available for the next target. This rollover effect is why progress can accelerate later even if the first months feel slow.
A worked example
Consider three debts: a high-rate credit card, a medium-rate personal loan, and a lower-rate car loan. Avalanche usually saves more interest because the expensive balance is attacked first. Snowball may close one debt faster if the smallest balance is not the highest-rate debt.
What we intentionally simplify
The calculator does not model late fees, new purchases, promotional rates that expire, settlements, lender hardship plans, or minimum-payment formulas that change dynamically as balances fall.
Why small extra payments matter
Extra money reaches the target balance after minimum payments are handled. Because that target balance then accrues less interest next month, a recurring extra payment changes both the payoff date and the future interest charged.
Where users can misread the model
A debt-free date assumes the plan is followed and no new balance is added. If a card is still being used for new spending, the model becomes a description of one side of the account while the other side keeps moving.
Why two strategies can both be useful
Avalanche answers the mathematical question. Snowball answers a behavioral question. Because households are not spreadsheets, showing both strategies helps users decide whether the interest savings are worth the tradeoff in motivation.
What readers should compare
Look at payoff date, total interest, and the first visible win. If two strategies finish very close together, behavior may deserve more weight. If one debt has a much higher APR, the mathematical edge may matter more.
Why we show monthly detail
Debt plans often fail in the gap between intention and time. A month-by-month view makes the mechanics visible: how much interest was added, which balance received the extra payment, and when the next rollover occurs.
How to use the result well
Use the modeled payoff date as a planning target, then review monthly. If the plan only works when every extra dollar is perfect forever, choose a smaller extra payment that you can sustain.
Related tools
See the Debt Payoff Calculator and the Debt Payoff Guide.