Debt Payoff Calculator
Explain like I'm 5
Imagine you owe £3,000 on a credit card and you pay £100 a month. Some of that payment goes to interest first, and only the rest chips away at the actual debt. The calculator works out exactly how many months until it's gone, how much you'll have paid in interest, and, most importantly, how much faster you'd be done if you paid just a bit extra each month.
Payoff results
- First month: interest–
- First month: principal–
- Months to pay off–
- Total interest paid–
- Total amount paid–
With extra monthly payment
- Months to pay off–
- Months saved–
- Interest saved–
- Total interest paid–
- Total amount paid–
Show workings
Why minimum payments are expensive
Credit card minimum payments are typically 1–2% of the balance, or a set amount, whichever is higher. At those levels, most of each payment goes to interest. Pay £50 on a £3,000 debt at 22% APR and around £55 of that month's interest is due, so you are not reducing the balance at all. Increasing to even £100 a month makes a dramatic difference.
The reason is compound interest working in reverse. The less principal you carry, the less interest accrues. Every pound of principal you eliminate early saves you multiple pounds in future interest.
The case for a small extra payment
An extra £50 a month on a £5,000 debt at 18% APR cuts around a year off the payoff time and saves several hundred pounds in interest. The benefit is front-loaded: those extra payments in the early months, when the balance is highest, prevent the most interest from ever accruing.
This calculator is for a single debt
If you have multiple debts, the two common approaches are the avalanche method (pay off highest-rate debt first, mathematically optimal) and the snowball method (pay off smallest balance first, psychologically easier to sustain). For now, run each debt separately and focus your extra payment on whichever balance has the highest interest rate.
Related calculators
Once the debts are mapped out, the rest of the money picture helps.
Common questions
How is debt payoff time calculated?
The formula is: n = −log(1 − r × P ÷ M) ÷ log(1 + r), where P is the balance, r is the monthly interest rate (APR ÷ 12 ÷ 100), and M is the monthly payment. This calculator simulates each month to give an exact total interest figure.
What happens if my payment only covers the interest?
You never reduce the principal. The balance stays the same or grows. The calculator will flag this situation, increase your payment above the monthly interest figure to make progress.
How much does an extra payment save?
Even a small extra payment makes a disproportionately large difference early on, when most of each payment goes to interest. Enter an extra monthly payment to see the exact time and interest saved.
What is APR?
Annual Percentage Rate. It represents the yearly cost of a debt including interest and certain fees, expressed as a percentage. Find it on your credit card, loan, or overdraft statement.