How the credit card debt calculator works
This calculator is built for anyone juggling several consumer debts at different interest rates. Add each debt with its current balance and interest rate (a credit card, a car loan, a line of credit, an overdraft, or any other debt), and add as many as you like. Then choose one of three payment strategies to see how long payoff takes and what the interest costs.
The three payment strategies
- Minimum payment. The lowest amount your lender will accept each month, usually the interest charged plus a small percentage of your balance (we use interest plus 1%). It is the slowest, most expensive way to pay, and you will see just how long it drags out.
- Minimum plus extra. The minimum plus a fixed dollar amount you add on top. Paying even a little more each month can save you a surprising amount of interest.
- Fixed payment. A set amount you commit to every month, no matter what you owe. A steady fixed payment is one of the simplest ways to get ahead.
Avalanche vs. snowball
If you are carrying more than one balance, two popular payoff strategies can help you decide what to tackle first.
The debt avalanche focuses on the debt with the highest interest rate first, while you keep paying the minimum on the rest. Say you have one card at 19.95% and another at 24.99%. You would put extra money toward the 24.99% card first, because that is the debt costing you the most.
The debt snowball focuses on the smallest balance first, for the motivation of quick wins. If one card has a $2,000 balance and another has $5,000, you would clear the $2,000 first (still paying the minimum on the other) to build momentum. Pick whichever method keeps you going.