Debt Payoff Calculator

Methodology & calculation limits

How the payoff math works

The monthly budget is the sum of your original minimum payments plus your recurring extra payment. It stays fixed even after a debt closes: freed payments roll into the next target. Zero-balance entries still contribute their entered minimum; set that minimum to zero if it should not be in your budget.

The initial lump sum is applied before any interest, using your selected strategy without first reserving minimums. Each month, interest for each active debt is its opening balance × APR ÷ 1,200, rounded to the nearest cent. The calculator then pays all active minimums, capped at the amount owed, before directing the remaining budget to the strategy target. Target order is reconsidered after minimums and after each closure. Final payments never exceed the outstanding balance.

Avalanche orders by highest APR, then smallest balance. Snowball orders by smallest balance, then highest APR. Exact ties use entry order.

Month 1 means the end of next month; dates are calendar-month estimates, not lender due dates. The simulation stops after 1,200 months. A limit warning does not mean payoff is mathematically impossible. If one debt's monthly interest alone meets or exceeds the entire fixed budget, a lone remaining debt cannot shrink, or balances repeat unchanged, the plan reports that a higher payment is needed.

A small worked example

For a 1,000 balance at 12% APR with a 510 monthly payment and no lump sum, month 1 adds 10 interest and ends at 500. Month 2 adds 5 interest; the final payment is capped at 505. Payoff takes 2 months, total interest is 15, and total paid is 1,015.

Choosing avalanche or snowball

Avalanche prioritizes higher rates to reduce interest; snowball prioritizes smaller balances for earlier wins. The Consumer Financial Protection Bureau describes both debt-reduction methods. Compare the actual results here rather than assuming either method always finishes first.

Both comparisons use identical balances, minimums, recurring extra payments and lump sums. The target-month solver checks the selected strategy and returns a verified sufficient payment, not a guaranteed global minimum; changes in target ordering can affect the search.

Assumptions and limits

This is an educational estimate, not financial advice or a lender statement. APRs, minimums and your budget stay constant. It excludes daily interest, fees, promotional-rate changes, new borrowing, lender minimum changes, tax effects and hardship plans. A zero APR is supported; a zero minimum is allowed but can lead to increasing balances. An unused lump sum is not counted as paid.

Keep an emergency buffer in mind before making extra payments. This model is aimed at credit cards and installment debts; mortgages may need separate tax, housing and liquidity assumptions.

Debt payoff FAQs

What happens to minimum payments when a debt closes?

Your original total monthly budget stays fixed. Money freed by a closed debt rolls into the next strategy target, rather than reducing your monthly payment. Adjust your lender instructions separately; this calculator does not schedule payments.

Will these dates and amounts match my lender exactly?

Not necessarily. This model rounds monthly interest to cents and assumes fixed APRs and minimums. Lenders may use daily balances, different payment dates, fees or changing minimums. Confirm the final payoff amount with each lender.

Why is my target payoff month unavailable?

The goal must be a future month within 1,200 months. If no feasible payment is found within the stated input limits, try a later month or a larger initial lump sum. A sufficient payment estimate is not a guarantee of affordability or the smallest possible payment.

Can I include a zero-interest debt?

Yes. Enter 0 for APR. No interest is added while that rate stays zero. Promotional rate expirations are not modeled, so update the APR or make a separate scenario if your rate will change.

Should I build an emergency fund before paying extra?

A cash buffer can help avoid new borrowing when unexpected expenses arise. Consider your essential bills and savings needs before committing to extra payments; use the Emergency Fund planner alongside this plan.

Continue with the Debt Payoff Guide, Debt Avalanche vs Snowball example, or Pay Off Debt or Invest First?

Related tools: Emergency Fund · Budget Planner · Monthly Investment · Pay debt vs invest decision.

Sources and methodology: CFPB debt worksheet · How the calculator works.