Debt Payoff Calculator

Debt Payoff Calculator

Before you think about consolidating anything, it helps to see your current debts clearly. This calculator adds them up and works out, at the payments you make today, how long each one takes to clear, when you become debt-free and how much interest you pay along the way. It is the starting point you measure any debt consolidation loan against.

Enter each debt separately. You can mix credit cards and loans, and add as many as you like with the button below the list.

Calculator Inputs

• Type: Whether the debt is a credit card or an installment loan. It changes how interest is worked out — see below — so it is worth setting correctly.
• Balance: How much you still owe on this debt today, not the amount you originally borrowed.
• Monthly payment: What you actually pay toward this debt each month. On a credit card, use what you really pay rather than just the minimum, since that is what decides how quickly the balance falls.
• Interest rate: The annual rate (APR) on the debt. You will find it on a card or loan statement.

Loans vs credit cards: why it matters

The two types accrue interest differently, so the calculator treats them separately. Getting the type right matters because it changes the interest charged each month, and that difference builds up over the months it takes to clear the debt.

An installment loan (a personal loan, auto loan or mortgage) charges simple interest on the outstanding balance. Its monthly rate is just the annual rate split into twelve:

A credit card compounds, and most cards compound daily: a little interest is added to the balance each day, so the next day's interest is charged on that slightly larger amount. The calculator models this with a 365-day year and converts it into an equivalent monthly rate, so both kinds of debt can be stepped month by month:

In both formulas APR is written as a decimal (24% is 0.24) and the resulting monthly rate is i. Daily compounding makes a card's effective monthly rate a little higher than a loan's at the same headline APR. At 24%, for example, a loan works out to 2.000% a month while a card works out to about 2.020% — a small gap in any one month, but it adds up over a balance that takes years to clear.

From there the calculator repeats the same step each month until the balance reaches zero. Write balance_t for what you owe in month t. Interest is charged on that month's balance, your payment covers the interest first, and whatever is left over comes off the balance to give the next month's starting figure.

Because the payment is fixed, the interest portion shrinks as the balance falls, so more of each payment goes to the principal over time. Card rates are also usually variable, so they can rise as wider interest rates move, whereas an installment loan is normally fixed for its whole term — one more reason a card balance is harder to pin down than a loan.

Understanding Your Results

The summary tells you when your last debt is cleared and the total interest you pay to get there. The table breaks it down debt by debt:

• Paid off in: How long that debt takes to clear at its current payment.
• Debt-free by: The calendar month it is gone.
• Interest: The interest you pay on that debt over that time.

If a debt's monthly payment does not cover its interest, the balance would never clear on its own. The calculator flags that debt rather than showing a payoff date, because the real fix is a larger payment or a lower rate.

Assumptions & Limitations

The calculator holds the rate and payment you enter fixed until each debt is cleared. In reality, credit card rates are usually variable and can rise over time even if you change nothing, and card minimums usually fall as the balance drops, which would stretch the payoff out further. So treat these figures as the faster, cheaper case. The calculator does not model fees, promotional rates or missed payments. Figures are estimates to help you compare options, not a quote.