Free calculator
Enter your debts and interest rates. The debt ladder shows which to pay off first, which are a close call, and which can wait while you invest.
Calculated estimates for education only, not financial advice. Real returns and card terms vary. See how we check the numbers.
Add each debt you have: a name, the balance and the interest rate (APR) from your statement. The calculator puts every debt on a rung of the debt ladder, highest rate at the top, and tells you where your next extra dollar should go.
It starts with an example: a $6,000 credit card at 22%, a $15,000 car loan at 7% and a $20,000 student loan at 6.5%, the same debts Sam and Alex have in Lesson 14. Change them to your own numbers, add rows or remove them.
| Zone | Interest rate | Typical debts | What to do |
|---|---|---|---|
| 🔴 Red | above about 8% | credit cards, store cards, most personal loans | Pay off first, highest rate first |
| 🟡 Yellow | about 5% to 8% | today's car loans, new student loans, new mortgages | Close call: pay extra, invest, or split |
| 🟢 Green | below about 5% | older low-rate car loans, mortgages and student loans | Pay the minimum and invest the rest |
Paying off a debt earns a guaranteed return equal to its interest rate. Investing earns a possible return: the US stock market has averaged roughly 10% a year before inflation, but with big swings (about −37% in 2008).
So the question is always: a guaranteed X% versus a possible 10% with ups and downs. Above about 8%, the guaranteed return wins once you count taxes and risk. Below about 5%, investing usually comes out ahead; even a high-yield savings account pays around 4%. In between, it's genuinely close.
In Lesson 14, we followed two people with the same three debts and the same extra $500 a month for 10 years, in a 5%, a 7% and a 10% market:
That's exactly what the yellow zone means: either choice is reasonable.
The calculator lists your debts in avalanche order (highest rate first), which saves the most interest. If the snowball order (smallest balance first) is different, it shows that too. The snowball costs a little more but gives quicker wins, and the best plan is the one you'll stick with. Lesson 2 explains both.
Two things usually come first:
The full order is in the smartest order to use your money. To see how fast a single card disappears with a bigger payment, use the credit card payoff calculator.
It mostly depends on the interest rate. A common rule of thumb: pay off debt above about 8% before investing beyond an employer match, pay the minimum and invest when the rate is below about 5%, and treat 5% to 8% as a close call where splitting your extra money is reasonable.
Mathematically, the one with the highest interest rate (the avalanche method). If you need motivation, paying the smallest balance first (the snowball method) also works, at a slightly higher cost. Always keep paying at least the minimum on every debt.
At today's typical rates of around 7%, it's a close call. Paying it off early is a solid, guaranteed return; investing might do a bit better or a bit worse. Many people split their extra money between the two.
Usually yes, after your employer match, if the rate is low. Student loans below about 5% are in the green zone; new federal loans around 6.5% are a close call; private loans above 8% are usually worth paying off first.
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