Escaping High-Interest Debt

Credit card debt can be a significant financial burden due to high Annual Percentage Rates (APRs). Making only the minimum payment often means the majority of your money goes toward interest, barely reducing your principal balance. This calculator is a powerful tool to help you create a concrete plan to pay down your debt efficiently.

Choosing a Payoff Strategy

This calculator supports two common approaches to paying off debt:

• Fixed Payment Strategy: This strategy involves paying a consistent, fixed amount each month that is higher than the minimum payment. It's great for budgeting because you know exactly how much you're paying each month. Use this mode to see how increasing your payment by even a small amount can drastically reduce your payoff time and total interest paid.
• Target Time Strategy: If you have a specific goal, like being debt-free in 3 years (36 months), this mode will calculate the exact monthly payment you need to make to achieve it. This is ideal for goal-oriented financial planning.

Applying the Debt Avalanche Method

A popular strategy for tackling multiple debts is the "debt avalanche." This method involves making minimum payments on all debts, then using any remaining money to attack the debt with the highest APR. Once that debt is paid off, you roll its payment amount into the payment for the next-highest APR debt. You can use this calculator for each of your cards to understand their individual costs and prioritize them effectively.