Debt Avalanche Calculator: Calculation and Examples
Plan repayment by paying minimums on every debt and putting extra money toward the highest interest rate.
Understanding the calculation
The avalanche method prioritizes the highest APR after minimum payments. Freed payments roll into the same fixed monthly budget. Ties are resolved in entry order. Each debt’s minimum is held fixed rather than recalculated as a percentage.
Debt Avalanche formula
Monthly debt budget = sum of starting minimum payments + extra monthly amount. Apply monthly interest, pay minimums, then allocate the remaining budget by the selected strategy.
Worked example
With two 0% debts of $1,000 and $2,000, minimum payments of $100 each, and $100 extra, the fixed $300 monthly budget repays the $3,000 total in 10 months.
Assumptions and interpretation
Repayment estimates use fixed interest and equal monthly periods. No fees, rate changes, new borrowing, missed payments, or penalties are added. Interest accrues on the remaining balance, and the last modeled payment is capped at the amount owed.
Displayed amounts are rounded; intermediate calculations use unrounded values. Compare the result with the terms and payment schedule in your agreement. For background on the calculation, read the CFPB explanation of debt repayment strategies.
Frequently asked questions
What happens when the interest rate is zero?
No interest is added. Payments reduce principal directly, so a fixed term divides principal equally and a fixed payment determines how many months repayment takes.
Why might the actual result differ?
Payment timing, daily interest accrual, contract rounding, fees, and changing rates can differ from the monthly estimate. Check the lender or issuer’s agreement for the method used.
How are paid-off debts handled?
Freed payments stay in the original monthly budget and are allocated to the next priority debt. Payments never exceed the amount remaining on a debt.