Money, First Principles
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What's the fastest way out of debt?

List your debts and what you can pay each month. We'll compare two popular payoff methods side by side so you can pick the one that fits you.

Show rates as

"As quoted" shows each rate the way lenders and banks quote it. Results don't change.

APR vs. APY: why the same rate has two numbers

APR (annual percentage rate) is the yearly rate before compounding.APY (annual percentage yield) is what you actually pay or earn in a year once interest starts charging, or earning, interest of its own.

Lenders quote APR because it's the smaller number. Banks quote savings in APY because it's the bigger one. A 9.00% APR car loan charged monthly costs 9.38% a year. A 24.00% APR card charged daily costs 27.11%. A 5.00% APY savings account is a 4.89% APR.

To compare any two rates fairly, put them in the same unit. "Show rates as" switches every rate on the page; the results don't change, because the rate underneath doesn't.

Kind of rateQuoted asHow it's applied
Car, mortgage and personal loansAPRAPR ÷ 12, each month
Credit cardsAPRAPR ÷ 365, each day, compounded
SavingsAPYMonthly, from the APY
Investment returnsYearly (APY basis)Monthly: (1 + rate)1/12 − 1

A loan's APR can include some fees as well as interest, so turning it into an APY here covers interest only. Inflation is always a plain yearly rate.

Your debts

    On top of your minimum payments. Even a small amount makes a big difference.

    Paying $0 a month

    Snowball

    Smallest balance first

    Debt-free in
    —
    Total interest
    —

    Avalanche

    Highest interest rate first

    Debt-free in
    —
    Total interest
    —
    Total debt remaining

    Payoff order

    Snowball

      Avalanche

        What this means

        Both methods pay the minimum on every debt, then put every extra dollar toward one target debt. When that debt is gone, its payment rolls into the next one, so your payments snowball as you go.

        Snowball targets the smallest balance first. You clear whole debts sooner, and those quick wins help many people stay motivated. Avalanche targets the highest interest rate first, which usually costs less in interest overall.

        Feeling overwhelmed? A nonprofit credit counselor can help you make a plan, often for free. Find one through the National Foundation for Credit Counseling.

        Educational estimate only. It assumes fixed interest rates, no new charges or fees, and the same total payment every month. Interest follows how each debt is billed: credit cards charge APR ÷ 365 each day, compounded; loans and bills charge APR ÷ 12 each month.

        See the year-by-year table
        AfterSnowball balanceAvalanche balance