How it works
What this calculation includes
Each month the schedule adds interest to every open balance, using the annual rate divided by 12 and rounding to the cent. It then pays each debt its minimum, or the full balance if that is smaller.
The monthly budget is the sum of all minimums plus the extra amount, and it stays constant. When a debt is cleared, the minimum that was going to it moves to the target debt, so the total paid each month does not fall.
The target depends on the order chosen. With highest rate first, the target is the open debt with the highest rate. With smallest balance first, it is the open debt with the lowest balance. The comparison card shows both orders and the minimums-only case for the same inputs.
Debt payoff month
Payment covers first, then principal; any goes to the target debt after each .
In words Each month interest is added to the balance, every debt gets its minimum, and any leftover budget goes to the target debt.
- Monthly interest (balance × APR ÷ 12)
- Remaining balance
- Annual percentage rate
- Required minimum payment
- Extra amount sent to the target debt
Example
- Balance: $5,000.00
- APR: 22%
- Minimum: $150.00
- Extra: $100.00
- Monthly interest ≈ $91.67 in month 1
- Payment covers interest first, then principal; extra goes to the target debt.
- Cleared in 26 months.
Months to clear: 26
Worked example
Using the default inputs on this page.
- Payoff order
- Highest rate first
- Extra payment each month
- $200.00
- Debt 1 balance
- $6,000.00
- Debt 1 annual rate
- 22.00%
- Debt 1 minimum payment
- $150.00
- Debt 2 balance
- $4,000.00
- Debt 2 annual rate
- 9.00%
- Debt 2 minimum payment
- $100.00
- Debt 3 balance
- $1,500.00
- Debt 3 annual rate
- 14.00%
- Debt 3 minimum payment
- $50.00
Time to debt-free, highest rate first
2 years, 4 months
$2,154.13 total interest on $11,500.00
Questions
What is the difference between the two orders?
Highest rate first sends extra money to the debt with the highest annual rate. Smallest balance first sends it to the debt with the lowest balance. Both pay every minimum each month.
What does minimums only mean?
Each debt is paid its own minimum and nothing extra, and a cleared debt's minimum is not moved to another debt.
Why does the calculator ask for a minimum above the interest?
If a minimum is no larger than a month of interest, the balance does not fall. The calculator needs payments that clear every balance within 100 years.
What is left out?
New charges, fees, promotional rates, and changing minimums. Rates and minimums are held fixed.
Sources
- Loan estimate: how a fixed mortgage payment is built Consumer Financial Protection Bureau. Retrieved 2026-10-11.