WorthMorrow

Debt Payoff Calculator

This calculator shows how long it may take to clear a debt at a given interest rate and payment, the total interest paid, and how much interest an extra monthly payment or a one-off lump sum could save. It treats your debts as one combined balance at an average rate.

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Educational estimates, not advice. Results depend on the assumptions you enter and are not predictions or personalised financial, investment, tax or legal advice. Read the financial disclaimer.

Calculator

Estimated time to debt-free

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Estimated total interest

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Interest saved vs minimum only

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The debt

Your payments

What you pay in total

  • Amount borrowed (after lump sum): –
  • Interest: –

How the calculation works

The lump sum is subtracted from the balance first. Then, each month, interest equals the balance times the annual rate divided by twelve, and the rest of the payment reduces the balance. Months are counted until the balance reaches zero (capped at 100 years). The same is run for the minimum payment alone to estimate interest saved.

Monthly interest = balance × (APR ÷ 12)

If the payment is not larger than the monthly interest, the balance never falls and the calculator says so.

Key assumptions

  • Several debts are treated as one balance at one average rate. A payoff order such as “avalanche” or “snowball” needs the debts listed separately, so it is not modelled here.
  • The rate is fixed and no new borrowing happens.
  • Fees, penalties and promotional rates are not included.
  • Payments are made monthly, on time.

Worked example

Debt 25,000 at 18.5% a year, minimum payment 650, extra payment 250 a month and a one-off 1,000 payment at the start (figures in US dollars):

  • Balance after the lump sum: 24,000
  • Estimated time with the extra payment: 35 months (2.9 years)
  • Estimated total interest: 7,152
  • Interest saved against paying the minimum only: 4,630

How to interpret the result

Look at two numbers together: the time to clear the debt and the total interest. A small increase in the monthly payment often removes a disproportionate amount of interest, because it reduces the balance that interest is charged on. If the calculator warns that the balance does not fall, the payment is too low to make progress at that rate.

Common mistakes

  • Entering a promotional rate that will end.
  • Forgetting that the minimum payment on many cards falls as the balance falls.
  • Treating a lump sum as free when it comes from an emergency reserve.
  • Averaging rates carelessly: a weighted average by balance is more accurate than a simple one.