How is the minimum payment calculated?

Standard estimate: 1.5% of the current balance, with a $25 floor. Real card minimums vary slightly by issuer.

Does this account for new spending?

No — the simulation assumes you stop adding to the balances. Cut up the cards or freeze them while paying down.

Should I tackle student loans the same way?

The same avalanche/snowball logic applies, but federal student loans have flexibility (income-driven repayment, public-service forgiveness) that aggressive payoff sacrifices. Run the numbers both ways before plowing extra money into federal loans.

Will paying off debt help my credit score?

Lowering revolving credit-card balances helps fastest because credit utilization (balance ÷ limit) is roughly 30% of the FICO score. Closing a paid-off card can hurt utilization by reducing total available credit — keep zero-balance cards open if possible.

Debt Payoff Calculator — embedded

Result

Best strategy: Snowball

Saves $0.00 in interest

Snowball — pays off in54 months (4.5 yrs)
Snowball — total interest$6,566.87
Avalanche — pays off in54 months (4.5 yrs)
Avalanche — total interest$6,566.87
Total balances$25,500.00
Monthly budget$600.00

Avalanche saves $0.00 vs Snowball— Strategies are close — pick the one you'll stick with.

Avalanche (highest APR first)

Mathematically optimal — Brigham, Fundamentals of Financial Management.

54 months (4.5 yrs) · $6,566.87 interest

Snowball (smallest balance first)

Behavioral win — Gal & McShane J Marketing Research 2012.

54 months (4.5 yrs) · $6,566.87 interest

Total balances

$25,500.00

Your monthly budget

Both strategies require staying above all minimums combined.

$600.00

Source: CFPB Strategies for Paying Off Credit Card Debt; Gal D & McShane BB, J Marketing Research 49(4) 2012 (Snowball validation).

Not financial advice — Simulation assumes new charges stop. Variable-rate cards re-price during payoff. Federal student loans have income-driven repayment / forgiveness flexibility that aggressive payoff sacrifices — model both. Free help: NFCC-affiliated nonprofit counselors.

How to use this calculator

Enter each debt's current balance and APR.
Set the total amount you can put toward all debts each month.
Compare the two strategies and pick the one that fits your psychology.
For more debts, group small ones together as one entry.

About this tool

Two proven debt-payoff methods, side by side. The Snowball method targets your smallest balance first (regardless of interest rate) — quick wins, big motivation. The Avalanche method targets the highest APR first — mathematically optimal, saves the most interest. Enter up to three debts and your total monthly payment budget; the calculator simulates both strategies month by month and tells you which one frees you faster and how much interest you save by going avalanche. If your budget is below the combined minimums, you'll see "budget too low" — increase it or list fewer debts.

How it works — the formula

Each month, for each debt:
  interest_t = balance · APR/12
  principal_t = payment_t − interest_t
Avalanche order: highest APR first.   Snowball order: smallest balance first.

Both methods make the minimum payment on every debt and direct any extra dollars to a single "focus" debt until it is cleared, then roll its previous payment onto the next. Avalanche minimizes total interest paid (Brigham, Fundamentals of Financial Management). Snowball, popularized by Dave Ramsey and validated by behavioral research from the Kellogg School of Management (Gal & McShane 2012), produces faster early wins that improve adherence.

Sources: CFPB — Strategies for paying off debt · Gal D & McShane BB — Can small victories help win the war? Evidence from consumer debt management (J Marketing Research 49(4) 2012) · NFCC — Find a nonprofit credit counselor

Worked examples

Example 1

Three-card portfolio, avalanche

Inputs:: Card A $5k @ 22%, Card B $3k @ 18%, Card C $2k @ 12%; total $300/mo budget
Output:: Avalanche order A→B→C clears all in ~38 months; total interest ≈ $2,400

Example 2

Same portfolio, snowball

Inputs:: Same balances and budget
Output:: Snowball order C→B→A clears all in ~40 months; total interest ≈ $2,650; first debt cleared after ~7 months

Example 3

Adding extra payment power

Inputs:: $300/mo → $500/mo budget, avalanche
Output:: All cleared in ~22 months; total interest ≈ $1,260 (vs $2,400)

Limitations

Assumes new charges stop — adding fresh balances during payoff makes the simulation invalid.
Variable-rate debts (most credit cards) can re-price upward during payoff in response to FRB rate changes.
Tax-deductible interest (some student loans, mortgages) can lower the effective rate and change the avalanche order.
Behavioral adherence often beats math — pick the method you will actually stick with.

Debt-payoff plans depend on stable income and stopping new borrowing. This calculator does not provide financial or credit-counseling advice — free help is available from NFCC-affiliated nonprofit counselors.

Frequently asked

Avalanche always saves more in pure dollars. Snowball wins if you need quick visible progress to stay motivated. Pick the one you'll actually follow through on.