Debt payoff calculator
A small payment can keep a debt alive for years. See how much of what you pay really reduces the balance, how long it will take to clear it and how much you save by paying a little more.
Year by year
| Year | Debt at year end | Interest so far |
|---|
How to work out how long it takes to pay off a debt
Enter what you owe, the annual interest rate and what you pay each month. The calculator tells you how long it will take to clear the debt, how much interest you will pay and how much of each payment really reduces the balance. You can compare it with another monthly payment.
Example: with a debt of 3,000 at 20% a year and payments of 80 a month, in the first month 50 is interest and only 30 reduces the debt. It takes 5 years and you pay 1,747 in interest. Paying 120 a month you would clear it in 2 years and 9 months and save 834.
How it is calculated
- Monthly interest = balance × annual rate ÷ 12. What reduces the debt is the payment minus that interest.
- Each month: new balance = balance + interest − payment, until it reaches zero.
- If the payment does not exceed the first month's interest, the debt never goes down.
Assumptions
- No new purchases or fees during the period.
- Fixed interest rate.
- Payment made at the end of each month.
Frequently asked questions
Why does my debt barely go down even though I pay every month?
Because part of every payment goes on interest. With 3,000 at 20%, the first month generates 50 of interest: if you pay 80, only 30 reduces the debt.
What if I pay only the interest or less?
The debt never goes down. In the example, paying 50 a month or less keeps the balance the same or makes it grow. The calculator warns you when that happens.
How much do I save by paying a little more each month?
A lot, because the debt falls sooner and builds up less interest. In the example, going from 80 to 120 a month saves 834 in interest and more than two years of payments.
Which interest rate should I enter?
The nominal annual rate of your card or loan, shown in your agreement or statement. The calculator divides it by 12 to get each month's interest.
Does it account for new purchases or fees?
No. If you keep using the card or there are fees, the debt will take longer to fall. To see the real effect, check each month how much the balance has gone down.