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How to Use a Debt Payoff Calculator

A calculator can help you crunch the numbers on your debt payoff plan.

Written by Ben Luthi / July 12, 2022

Quick Bites

  • A debt payoff calculator can provide you with important information as you develop your payoff plan.
  • Different calculators can help you in different ways, so it's important to try out multiple options to find the best fit.
  • Be sure to track your progress and make adjustments to your plan as necessary to avoid falling behind.

If you want to gain financial stability—and achieve your biggest, wildest money goals—there are two levers you can pull to jumpstart the process.

"People can put their financial house in order by reducing debt and acquiring assets that grow in value over time," says Robert Johnson, a professor of finance at the Heider College of Business at Creighton University.

Let's focus on reducing debt here. Debt payoff calculators can help you develop your strategy for paying off outstanding balances by giving you key information about your situation and how much your plan can save you. There are even specialized debt payoff calculators that can guide you through specific approaches.

If you're planning to tackle your debt or you're already in the middle of your payoff plan, here's how a debt payoff calculator can help you, plus tips on how to use one.

What is a debt payoff calculator?

A debt payoff calculator is a type of calculator or program that you can use to work out the math on your debt payoff plan.

While different calculators can function uniquely, you'll generally provide some information about your debt accounts. The tool will then pump out how long it'll take to pay off your debt and how much interest you'll pay.

In addition to the minimum or standard payments on your accounts, you can also add an extra monthly payment, and the calculator will tell you how much faster you'll be debt-free and how much interest the additional payment will save you.

Types of debt payoff calculators

There are also many different types of calculators that can help you with specific approaches to paying down your debt. Some examples include:

  • Additional payment calculator: With this type of calculator, you'll simply see how much an extra monthly payment toward your debt can help over time. However, there's no strategy beyond your additional payment.

  • Debt snowball calculator: With this approach, you'll make an extra payment on just the account with the lowest balance. Once that's paid in full, you'll roll the amount you were putting toward it into the next-lowest balance and keep doing that until you've paid in full. A debt snowball calculator will show you how the snowball effect will work over time.

  • Debt avalanche calculator: This type of calculator works the same as the debt snowball calculator, but with one key difference: Instead of targeting your lowest balances first, you'll focus on your accounts with the highest interest rates.

  • Hybrid calculator: With this option, you'll take the best aspects of the debt snowball and avalanche methods and calculate the debt-to-interest ratio for each account—divide the account balance by its interest rate—and target the accounts with the lowest debt-to-interest ratio first.

Some other calculators may help you pay down your debt based on other factors, such as the payment amounts, your credit utilization rates, the total interest amount that you pay each month and more.

"People often make the mistake of trying to pay down the largest amounts of debt first," says Johnson. But with that approach, it can take longer to see results, so consider one of these approaches instead.

Creighton University professor Robert Johnson's headshot

Meet the Expert

In addition to his professorship at Creighton University’s business school, Johnson is a Chartered Financial Analyst®. Until 2018, he was president and CEO at The American College of Financial Services.

Where to find a debt payoff calculator

With a quick internet search, you should have no problem finding a long list of options from which to choose. But finding a debt payoff calculator that works for your situation and what you want to do can take a little more time.

If you're looking to pay off just one loan or credit card, a simple calculator will do the trick. But if you want to employ a specific strategy, you'll want a related calculator.

Some websites that offer basic calculators for one or more debt accounts include:

That said, while some calculators can help you crunch the numbers, they won't save your information.

One website, Undebt.it, lets you save the details you provide and also offers calculators for nine different repayment strategies, including the chance to develop your own custom plan.[1] You can also use debt payoff apps, which can provide you with the numbers and other features to help you achieve your goal.[2]

Take some time to research and try out several options to determine which one provides the best fit for you and your payoff plan.

How to use a debt payoff calculator

Before you can use a debt payoff calculator, you'll need to know what you're working with. You can use pen and paper, a spreadsheet or even the calculator itself to list out each of your debt accounts and its terms. The list of necessary information includes:

  • The name of the creditor

  • Your account balance

  • Your interest rate

  • Your minimum monthly payment

If you're making more than the minimum monthly payment on a credit card or other debt, you'll also want to note that so you have a full picture.

Once you have all of this information, you'll enter it into the calculator. The results will vary depending on which tool you’re using. While some debt payoff calculators may provide you with some basic numbers on how long it'll take you to pay off the debt and how much interest you'll pay, others will provide charts and graphs to give you a visual representation of your plan.

You can also play around with the extra monthly payment and see how increasing or decreasing it will affect your debt-free date and total interest charges.

It's important, though, to make sure that your extra debt payment amount is reasonable. Review your income and expenses to see how much money you have left over at the end of the month and look for areas where you can cut back, so you can increase your extra payment.

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Article Sources
  1. "How Undebt.it Works," Undebt.it, https://undebt.it/how-undebt.it-works.php#payment_methods.
  2. "Meet your new debt payoff superpower," Debt Payoff Planner, https://www.debtpayoffplanner.com/.

About the Author

Ben Luthi

Ben Luthi

Ben has been writing about money since 2013. He's been on staff at NerdWallet as a credit card writer and for Student Loan Hero, where he covered student loans and other personal finance topics. Ben's work has appeared in U.S. News, The New York Times, Experian, FICO, Credit Karma, Bankrate and more

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