Pay down debt

Start with the debt and payment assumptions

For each debt, collect the balance, annual percentage rate, required minimum and the date of the source. A current account balance alone does not establish the lender payment rule. Keep a fixed payment you choose for an example distinct from a minimum required by your agreement. Also distinguish earlier debt from card purchases already counted in your spending plan.

Decide which monthly payment amount the rest of your plan can support. A projection cannot verify that cash will be available on the payment date. If required payments exceed the amount entered, the scenario needs a visible shortfall rather than a schedule that quietly skips part of a minimum. The public calculator models one debt with one fixed monthly payment.

Compare priorities using the same budget

The highest-interest-rate approach, often called avalanche, directs extra payments toward the debt with the highest rate after required minimums. The smallest-balance approach, often called snowball, targets the smallest debt first. These approaches emphasize different goals: interest cost and closing individual balances. Neither label tells you whether a particular payment budget is affordable.

For a useful comparison, hold the total payment budget and other assumptions constant. A plan with larger payments may finish sooner simply because more money goes toward debt. When one balance reaches zero, decide explicitly whether its former payment continues toward the remaining debt. Do not compare a shrinking payment budget with a fixed one and attribute the entire difference to the method.

Consumer Financial Protection Bureau: How to reduce your debt

Know what the estimate leaves out

Many credit cards calculate interest using daily balances. This calculator instead uses annual rate divided by twelve, once per modeled month, with cent rounding. It assumes the rate and payment remain constant and excludes fees, new borrowing, promotional rate changes, grace periods and prepayment penalties. A supplied first-payment date labels the schedule; it does not change interest to daily accrual.

At $1,000 and 12%, a $10 payment only covers the first month of modeled interest. A $9 payment leaves $1 more debt after that month. Neither produces a payoff date under the unchanged assumptions. Separately, reaching the chosen month limit with debt remaining means the estimate stopped; it is not proof the debt can never be repaid.

Consumer Financial Protection Bureau: How card interest is calculated

Read the schedule before using the result

Check the first period against the entered balance, rate and payment. Then inspect the final period and any remaining balance. If an input changes, calculate again; the previous result belongs to the earlier assumptions. Keep the model description with any result you record. A saved or written scenario does not send a payment, change your agreement or confirm that a lender has received money.