Calculation Methodology

What the calculator is

This calculator is a planning model based on standard interest and amortization methods. It does not reproduce an individual lender statement. Actual lender calculations may differ because of statement timing, daily interest, fees, compounding methods, payment posting dates, changing minimum-payment formulas, and lender-specific policies.

Monthly interest

For each debt, the model converts the entered annual percentage rate to a monthly rate by dividing it by 100 and then by 12. At the start of each simulated month, interest equals the current balance multiplied by that monthly rate. The interest is added before that month’s payments are applied.

The model does not use an average daily balance or a daily periodic rate. That is a deliberate simplification for side-by-side planning.

Required and extra payments

The required payment entered for each debt remains a fixed dollar amount throughout the simulation. The payment is limited to the amount needed to clear the balance, so the model does not create a negative balance.

For snowball and avalanche, the monthly budget is fixed at the sum of all starting required payments plus the extra monthly amount. When a debt is paid, the budget that is no longer needed for that debt becomes available to the next target in the same month. In the minimum-only scenario, freed payments are not reassigned to another debt.

Payoff ordering

• Avalanche: after required payments, remaining budget goes to the active debt with the highest effective annual percentage rate.
• Snowball: after required payments, remaining budget goes to the active debt with the smallest remaining balance.
• If more budget remains after clearing a target, it moves to the next target during that month.
• If two debts have the same sorting value, their entered order is preserved by the current JavaScript sorting behavior.

Balance-transfer scenario

Only credit-card entries are eligible. The model selects the eligible card with the highest entered rate, adds the entered transfer fee percentage to its balance, and assigns a zero rate through the entered number of promotional months. The entered post-promotion rate starts in the following month. The card’s entered required payment remains unchanged, and all debts then follow the avalanche order.

The reported transfer cost is simulated interest plus the transfer fee. The model does not predict approval, credit limit, a partial transfer, annual fees, new purchases, or issuer-specific payment allocation.

Consolidation-loan scenario

The principal is the sum of all entered debt balances. The term in years is converted to months and rounded to the nearest whole month, with at least one month. For a positive rate, the fixed monthly payment uses the standard amortization formula:

payment = principal × monthly rate ÷ (1 − (1 + monthly rate)^−months)

At a zero rate, the payment is principal divided by months. Total interest is total payments minus principal. The scenario does not include an origination fee, variable rate, optional insurance, or extra payments.

Rounding and payoff timing

Calculations use JavaScript floating-point values without rounding each simulated month. Currency shown on the page is normally rounded to the nearest dollar for readability. A debt is treated as paid when its remaining balance is one-half cent or less. Simulations stop after 600 months, which is 50 years. If the ending balance is still shrinking, the result is shown as longer than the model limit. If it is flat or growing, the result says the entered payments do not decrease the balance.

What is not modeled

• Daily balance changes, statement closing dates, and exact payment-posting times
• Changing rates, except the entered balance-transfer promotional change
• Changing minimum-payment formulas, new charges, late fees, annual fees, or penalty rates
• Taxes, credit-score effects, approval likelihood, lender eligibility, or credit limits
• Behavioral changes or missed payments

How to use the estimate responsibly

Use current figures from your statements or lender account, recalculate when a material term changes, and compare the direction and approximate cost of strategies. For an exact payoff amount or legal obligation, rely on the lender’s written information.

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