Debt Calculator

Created by Tibor Pál, PhD candidate
Reviewed by Dominik Czernia, PhD and Jack Bowater
Last updated: Dec 07, 2022

Use the debt calculator to estimate the finance charge of your total debt and to see how long it takes to pay off your debt with different debt repayment strategies. With this tool, you can quickly compute and compare the cost of your debt in the most common debt management plans.

Read further to learn what debt definition is, how to calculate total debt, and get out of debt fast.

If you are about to consider refinancing some of your debts, you may employ our refinance calculator or mortgage refinance calculator, built specifically for mortgage loans.

What is debt? - the debt definition

In short, debt is money borrowed by one party from another. For example, if you borrow a certain amount of money from someone on the condition that you repay it at a later date, usually with interest, a debt-based financial arrangement is created.

The most common way to incur debt is to turn to a bank for a loan, such as a mortgage, auto loan, student loan, personal loan, or a credit card. When you sign a loan contract, you agree to repay the loan's balance by a specific date in the future. The loan term also determines the interest rate with a given frequency of capitalization, or compounding. This refers to the percentage of the loan amount you must pay annually, and is calculated on top of what you already owe.

Besides bank loans, there are other types of debt agreements. For example, a dominant form of corporate debt is a bond designed to allow a company or a firm to generate funds by selling the promise of repayment to another party. Since bonds are available to the general public and typically involve a higher risk than an individual's loan contract, its interest rate is higher and is an investment opportunity.

If a company decides to raise 5 million dollars to fund a new factory, it can issue 5,000 bonds with a face value of 1,000 dollars each. Besides a promise for repayment of the face value at a specific date in the future, called the maturity date, the company is also obliged to make regular interest payments during the bond's lifetime. You may notice that bonds are very similar to loans, except that the company is the borrower, and the investors are the lenders or creditors.

How to get out of debt?

You may choose from multiple types of debt management plans to get out of debt depending on your financial situation or personal preferences. While for the majority the main priority is to minimize the finance charge on the debt, your main concern might be to manage the monthly minimum payments or simplify your debt structure. In this calculator, we incorporated the four most common debt repayment methods.

  • Minimum payment - it allows you to pay the smallest amount monthly towards your debt at a time of financial hardship, but it generally has the highest charged interest.
  • Snowball method: by keeping your monthly payment constant and allocating the freed-up money to the debt with the lowest balance, you can reduce the number of debts as quickly as possible.
  • Avalanche method: as in this case, the freed-up money is channeled to the debt with the highest interest rate, minimizing the amount of interest overall.
  • Debt consolidation: consolidating your debt may help you restructure and simplify your monthly payments, providing both better interest charges and shorter repayment terms.

If you happen to struggle with student debt, you may consider switching your student loan repayment plan or look into the possibility of debt relief.

How to use the debt calculator?

To use the debt calculator, fill in the following fields:

  1. Number of debts: For the first step, you need to set the number of debts you have. Note, that the maximum number of debts is six, and you must have at least two debts to apply the debt calculator.

  2. Debt specifications: Provide the debt balances and their related interest rates and monthly payment amounts. Note, that the monthly payments you set should be the required minimum, and we suppose that you can always increase the monthly instalments.

For the consolidation loan, you need to set the interest rate and a possible prepayment fee required to switch to the consolidation loan.

  1. Debt summary

You can read the main details, such as APR, interest, and repayment term, for each of the four most common debt management plans. Below the section, you can choose to display the debt payoff chart of balances or the payment schedule table for a more in-depth insight.


You should consider the debt calculator as a model for financial approximation. All payment figures, balances, and interest figures are estimates based on the data you provided in the specifications that are, despite our best effort, not exhaustive.

For this reason, we created the calculator for instructional purposes only. Yet, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.

Tibor Pál, PhD candidate
Number of debts
Debt #1
Balance #1
Interest rate #1
Payment #1
Debt #2
Balance #2
Interest rate #2
Payment #2
Debt #3
Balance #3
Interest rate #3
Payment #3
Consolidation loan
Interest rate
Prepaid fee
Debt summary
Total debt
Monthly payment
MethodAPRInterestPayoff after
Minimum payment13.55%*$14,216.139 years and 9 months (117 months)
Snowball15.93%$6,508.033 years and 11 months (47 months)
Avalanche15.14%$6,034.173 years and 10 months (46 months)
Consolidation10.62%$3,242.473 years and 5 months (41 months)
* We estimate APR for the minimum payment method with the weighted average procedure.
Chart of balances
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