Debt Payoff Calculator

Debt payoff calculators model two key decisions: how long it takes to eliminate a debt with a given monthly payment, and how much total interest you will pay over that period. The math uses the same loan amortization formula used by banks, because that is exactly how banks calculate your minimum payment.

Monthly payment needed to pay off in N months: M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]

Where:

• M = monthly payment
• P = current outstanding balance
• r = monthly interest rate = APR ÷ 12
• n = desired number of months to pay off

Months to pay off at a fixed payment: n = −ln(1 − (P × r / M)) ÷ ln(1 + r)

Total interest paid: Interest = (M × n) − P

What each variable means:

• Balance (P): the current amount owed, not the original loan amount. Enter today’s outstanding balance.
• APR (r): the annual percentage rate on the debt. Credit cards: 20–30%. Personal loans: 8–20%. Auto loans: 5–12%.
• Monthly Payment (M): must exceed the minimum interest-only charge (P × r) or the balance never decreases.

Snowball vs Avalanche methods:

• Debt Avalanche: pay highest-APR debt first. Mathematically optimal; minimizes total interest paid.
• Debt Snowball: pay smallest balance first regardless of rate. Psychologically powerful; faster early wins maintain motivation.

The credit card minimum payment trap

$5,000 at 24% APR. The monthly rate is exactly 2%, so the interest alone is $100 a month.

A card whose minimum is a flat 2% of the balance therefore asks for exactly $100 in month one, which covers the interest and nothing else. The balance does not move. It keeps not moving until the balance falls far enough for the $25 floor to take over, and even then it is a 40-year affair. A flat 2%-of-balance minimum at a 24% APR is not a repayment plan; it is a subscription. Enter $5,000, 24% and $100 above and the calculator will tell you the payment is too low rather than invent a number.

Now pay $250 a month on the same balance:

• Payoff time: 26 months
• Total interest: $1,449.36

Worked example: Balance: $8,500. APR: 22%. Target: 24 months.

r = 22% ÷ 12 = 0.0183333/month, and (1.0183333)²⁴ = 1.5465

M = 8,500 × [0.0183333 × 1.5465] ÷ [0.5465] = 8,500 × 0.051878 = $440.9643/month

Total paid = $440.9643 × 24 = $10,583.14 Total interest = $10,583.14 − $8,500 = $2,083.14

Round that up to $440.97 when you enter it above, and the calculator returns 24 months and $2,083.11. Round it down to $440.96 and it returns 25, because you finish a few cents short and a lender still wants a twenty-fifth payment for them.

Carry the exponent to four decimals too. Truncating the monthly rate to 0.01833 gives (1.01833)²⁴ = 1.5393 instead of 1.5465, which puts the payment at $444.13 and the answer $76 out.