How it works
What this estimate calculates
Each month, the model adds interest using APR divided by 12, pays each active debt's minimum, and sends the rest of the fixed payment budget to the current target. Avalanche orders debts by APR, then balance, then entry order. Snowball orders them by balance, then APR, then entry order. Payments freed by a paid debt roll forward, and projections stop after 1,200 months.
Assumptions to keep in mind
- Balances, APRs, and minimum payments remain fixed except for modeled payments and interest; no new purchases, fees, or rate changes are included.
- Interest accrues monthly at APR divided by 12. Real lenders may use daily interest or different payment-allocation rules.
- The same initial minimum-payment total plus entered extra payment remains available each month and freed payments roll to the next debt.
Reviewed references
Sources behind this calculator
Last reviewed: . These references support the concepts and context; their publishers do not review or endorse TrueCost.
- Reducing debt worksheet (opens in a new tab)Consumer Financial Protection Bureau
Comparing smallest-balance and highest-interest payoff strategies while rolling freed payments to the next debt.
Questions people ask
What is the difference between avalanche and snowball?
Avalanche targets the highest APR first, while snowball targets the smallest balance first. Both continue paying every required minimum and roll freed payments forward.
What does extra monthly payment mean?
It is the amount available in addition to the minimum payments entered. The calculator holds that combined monthly budget constant as debts are paid off.
Why might a lender's payoff differ?
A lender may calculate interest daily, change minimum payments, charge fees, or apply payments differently. Use current statements for transaction-specific payoff figures.
What do stalled and maximum-term statuses mean?
Stalled means the entered payment budget cannot reduce the modeled balances. Maximum term means a balance remained when the 1,200-month projection limit was reached.
Use the result as a starting point
Try a conservative scenario and an optimistic one. If the decision only works under one narrow set of assumptions, that is useful information. For a purchase, loan, tax, or investment decision, confirm the final figures with current documents and an appropriately qualified professional.
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