A debt payoff calculator can show exactly how much you can save on interest by breaking down the best debt reduction plan for your financial situation.

Before you use a debt repayment calculator, you first need to assess how much debt you have. To find out how much debt you have, create a list of your existing debts and include the following important information:

Once you have this information, you can use a debt payment calculator to determine the best repayment plan.

- How much you owe on the debt
- The interest rate you pay on each debt monthly
- Your loan term for any installment loans (revolving debt like credit cards won’t have set terms)
- How much you’re paying toward debts each month

Once you have this information, you can use a debt payment calculator to determine the best repayment plan.

Select an option below

For this step, you’ll need to input the basic information you collected about your existing debt into the debt calculator, including the current balance due, interest rate, and minimum monthly payment.

The debt calculator will display two repayment options — the debt snowball and debt avalanche — and show you the interest savings for each. The snowball repayment method focuses on paying the debt with the smallest balance first, while the avalanche repayment method dials in on the highest interest debt first.

You can then use the debt repayment calculator to see how extra payments can help you save money and get out of debt quicker.

For the different options presented in the repayment calculator, you’ll see predictions of when you’ll complete paying off each individual loan or debt account. Having an “end date” can be extremely motivating, so use this information to set a debt payoff schedule. This is one of the big benefits of using a debt repayment calculator.

Now, the best part! The debt calculator will show you how much you can save in interest and estimate how much you’ll pay in interest with each debt reduction strategy.

Let’s walk through an example to see the debt payoff calculator in action. Sandy Spender currently has 4 debts, which include:

Sandy is currently putting $375 a month toward debt and can afford an extra $200 monthly with proper budgeting. By sending that extra $200 each month to the smallest debt first (the debt snowball approach), Sandy can save $981 in interest. But with that extra money funneled toward the highest-interest debt first (the debt avalanche approach), Sandy can save $984 in interest.

- Auto loan with a balance of $4,000 and an interest rate of 8%
- Credit card #1 with a balance of $2,500 and an interest rate of 17%
- Student loans with a balance of $7,000 and an interest rate of 4%
- Credit card #2 with a balance of $500 and an interest rate of 16%

Sandy is currently putting $375 a month toward debt and can afford an extra $200 monthly with proper budgeting. By sending that extra $200 each month to the smallest debt first (the debt snowball approach), Sandy can save $981 in interest. But with that extra money funneled toward the highest-interest debt first (the debt avalanche approach), Sandy can save $984 in interest.

Plus, Sandy discovers that she can get out of debt 24 months sooner by committing to a steady repayment plan. Of course, it will still take her several years to reach the end goal of debt freedom, but with the help of the debt payment calculator, Sandy now has a clear debt payoff schedule and understands the immense savings possible with sticking to a steady payment plan.

Calculating debt payoff amounts can be tricky. And that’s because when you begin to make larger payments toward debt, you’ll end up paying less in interest over time. It’s wise to use a debt payoff calculator to help you understand the potential savings of paying back what you owe sooner.

For example, let’s say you are paying an installment loan of $1,000. The loan charges 12% interest and has a one-year repayment term. If you pay the loan over the 12-month term, you’ll make monthly payments of $89 and end up paying back a total of $1,068.

But if you wanted to pay off the debt early, say in month two, you’d end up only paying a total of $1,015, or about $15 in interest, leading to savings of more than $50 over the life of the loan.

For example, let’s say you are paying an installment loan of $1,000. The loan charges 12% interest and has a one-year repayment term. If you pay the loan over the 12-month term, you’ll make monthly payments of $89 and end up paying back a total of $1,068.

But if you wanted to pay off the debt early, say in month two, you’d end up only paying a total of $1,015, or about $15 in interest, leading to savings of more than $50 over the life of the loan.

The debt snowball method can help you eliminate debts one by one by focusing on repaying your smallest balance first and then the next smallest balance until you pay off the largest balance. You put as much money as you can toward that smallest balance while continuing to make the minimum monthly payment on each other debt. Once you’ve paid that off, you roll that amount over to your next smallest debt and follow that pattern until you’re debt-free.

This approach is best if you’re motivated by small, quick wins.

This approach is best if you’re motivated by small, quick wins.

OK, snowballs and avalanches aren’t exactly real-life opposites, but in the debt repayment game, they’re pretty close. The debt avalanche method follows a similar one-at-a-time mindset, but instead of going from smallest to largest balance, you go from the highest-interest account and to the lowest-interest account. Using the debt avalanche is best if you’re patient and confident you can withstand it potentially taking longer to get a victory. The main goal here is to save as much money on interest as possible.

While anyone can implement a debt repayment plan, debt consolidation is typically only an option for people with better credit scores. A debt consolidation loan can help you streamline your debt into a single monthly payment, presumably with a lower interest rate. Similarly, a balance transfer credit card can help you transfer credit card debt from one or multiple credit cards to another card that has a 0% introductory APR.

Let’s do it. We can match you with consolidation options based on your goals and debt info.

When it comes to debt repayment calculators and debt in general, there are certain terms that come up frequently and need further clarification. Here are the ones it’s important to know:

**Balance**: The base amount of money borrowed, not including interest.**Interest**: The amount charged by lender to borrow money.**Debt**: Money that you owe to someone else, like a lendor or creditor.**Debt Payoff Date**: The date of your final debt payments that will make you completely debt-free.**Annual Percentage Rate (APR)**: The cost of interest of credit card payments over the course of a year. A 24% APR means you'll be charged 2% interest each month on your debt balance.