Debt Payoff Calculator
Free Debt Payoff Calculator. Free online tool with accurate results using verified formulas. Includes worked examples, FAQ, and instant calculations.
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy
Debt Payoff Calculator Formula
Months = -ln(1 - Br/M) / ln(1+r)
B = balance, r = monthly interest rate (annual/12), M = monthly payment. The natural log formula gives the exact number of payments to reach a zero balance.
Debt Payoff Calculator — Worked Examples
Example 1: $5,000 at 19.99% APR, paying $150/month
Problem:Balance: $5,000, Rate: 19.99% APR (1.666%/month), Payment: $150/month
Solution:months = -ln(1 - 5000×0.01666/150) / ln(1.01666) = -ln(1 - 0.5553) / ln(1.01666) ≈ 47.8
Result:48 months (4 years), Total interest paid ≈ $1,724
Debt Payoff Calculator — Frequently Asked Questions
What is the debt snowball vs debt avalanche method?
Snowball: pay off the smallest balance first for quick psychological wins, then roll that payment to the next debt. Avalanche: put extra money toward the highest-interest debt first — this saves the most money overall. Both are effective; snowball builds momentum while avalanche minimizes total interest paid.
How does making only the minimum payment affect payoff time?
Minimum payments on credit cards are typically 1-2% of the balance, which barely covers interest. On a $5,000 balance at 20% APR, paying only the minimum (~$100/month) can take 30+ years and cost over $10,000 in interest — more than double the original balance.
Should I pay off debt or invest?
Compare your debt interest rate to your expected investment return (typically 7-10% for index funds). If your debt rate is higher — especially credit card debt at 15-25% APR — pay it off first. Low-rate debt like student loans or mortgages at 4-6% may be worth carrying while investing.
What is the true cost of debt?
The true cost includes all interest paid over the life of the debt. A $10,000 loan at 18% APR paid over 5 years costs about $15,400 total — $5,400 in interest. High-rate debt compounds quickly; even a 1-year delay in paying it down adds hundreds in extra interest.