How to pay off several credit cards
Take the cards in the answer above: $8,300 owed in all, $246.89 a month to pay them with, and the avalanche order, highest rate first.
- Avalanche lists the debts by rate, highest first, and equal rates by balance, smallest first. The list is made once, from the balances you start with, and does not change as they fall. Store card (22.36%) → Second card (22.36%) → Main card (22.36%)
- Each month, every balance first adds a month of interest: the balance times its rate, divided by twelve and rounded to the cent. In the first month: Store card: $900 × 22.36% ÷ 12 = $16.77 Second card: $2,400 × 22.36% ÷ 12 = $44.72 Main card: $5,000 × 22.36% ÷ 12 = $93.17
- Each card's minimum payment is 1% of the balance plus the month's interest, and never less than $35. Store card: $900 × 1% + $16.77 = $25.77, under the $35 floor, so $35 Second card: $2,400 × 1% + $44.72 = $68.72 Main card: $5,000 × 1% + $93.17 = $143.17
- Every card is paid its minimum, and the budget is exactly what the minimums come to this month, so nothing is left over yet. A minimum worked out from the balance falls as the balance does, while the budget stays where it is, and the difference goes to the first card on the list. $246.89 − ($35 + $68.72 + $143.17) = $0 left over
- Every month repeats that on the new balances, and when a card is cleared, what it was taking moves down the list. The last card is cleared after 4 years and 6 months. Everything paid above what was owed is interest. $13,167.81 − $8,300 = $4,867.81 interest
- Here the other method, snowball, makes the same list, so on the same budget it comes out exactly the same.
That is where the 4 years and 6 months and the $4,867.81 of interest in the answer come from. Paying each minimum on its own instead, with nothing passed on when a card is cleared, takes 16 years and 6 months and costs $11,114.06.
Several cards behave differently from one card
A single card has one answer: at this rate, under this minimum payment rule, the balance takes this long. Put three cards side by side and a second question appears that the single-card answer cannot reach. Every card is taking a minimum payment out of the same monthly budget, and each minimum is a share of a balance that is falling. The money you have available therefore changes shape month by month even if you never change what you pay.
This is what makes the minimum-payment trap worse across several cards than on any one of them. Pay each minimum separately and your total outlay drops every month, which feels like progress and is the opposite. Hold the total level and the same money clears the cards years sooner, because the payment freed by each cleared card lands on the next one.
The minimum payment rule matters more than the rate
The rule this page applies to every card is the field that decides the answer, and it is the field nobody explains. A rule that charges a share of the balance plus that month's interest always reduces the balance, because the interest is covered separately. A rule that charges a share of the balance and nothing else has to pay the interest out of that same share, so it only makes progress when the percentage is larger than the monthly rate.
On a card charging a rate in the low twenties a year, the monthly interest is a little under two per cent. A two per cent rule with interest included therefore moves the balance by a couple of tenths of a per cent a month, which is not a payoff schedule but a very slow leak. What rescues it is the floor, the absolute minimum below which the percentage stops applying, and on a large balance the floor is nowhere near.
One rule is applied to every card here rather than one per card. That is a limit of the form rather than a claim about reality: issuers do differ. No public dataset carries any issuer's minimum payment formula, so there would be nothing to fill six separate rules in from, and yours is in your cardholder agreement.
Where the starting rate comes from
The rate on every row starts at the average rate charged on United States card accounts that are actually paying interest, as published by the central bank. It is a market average and it belongs to nobody in particular, which is exactly why it is the starting figure: a page that opened on one issuer's rate would be making a suggestion it has no business making.
It is also not your rate. The line under the rate fields says which period the average describes, and the moment you type over it the page stops claiming the publisher stands behind the number. Your own rate is on your statement, and entering it is the single change that makes this page's answer yours rather than the market's.
Common questions
Which card should I attack first?
The table shows both answers. Highest rate first costs the least interest and is the arithmetically correct choice. Smallest balance first closes an account sooner, which some people need in order to keep going, and it usually costs surprisingly little extra. If the two orders come out the same for your cards, the page says so and there is nothing to decide.
Why does the answer differ from my card statement?
This page charges interest once a month on the balance. A real statement applies a daily rate to the average daily balance, so the timing of purchases and payments inside the billing cycle moves the figure a little. Over a long payoff the two stay close, but they are not the same calculation, and this one is the simpler of the two on purpose.
Are annual fees and late fees included?
No. Nor is new spending, an introductory rate, or a balance transfer and its fee. A transfer in particular would change the answer a great deal, and modelling it properly means modelling the day the promotional rate ends, which this page does not do. The full list of what is left out is under the method note.
What if the budget is below what the cards ask for?
Then no schedule is drawn. The page tells you what the minimums come to between them and stops, because a plan that skips a minimum payment is not a payoff plan. If that total is genuinely out of reach, a non-profit debt adviser is a better next step than any calculator.
Is anything I type stored?
No. The calculation happens on the server as part of rendering the page, nothing is written down, and the access log for this site drops the query string precisely so that the numbers you enter are never recorded.
Sources
The order and the schedule are arithmetic rather than a rule anyone publishes, so what these references pin down is what this page does not calculate.
How this is worked out
Interest for a month is each balance times its yearly rate divided by twelve, rounded to the cent in a single step. Every debt is paid what its own minimum asks, never more than it owes; whatever the budget leaves over goes to the first debt in the order and spills to the next once that one is settled. The order is fixed from the opening balances and is not recalculated as they fall.
The minimum payments and the interest on your own agreements are what actually govern, and nothing here accounts for keeping money aside for emergencies.
What the plan leaves out:
- Anything you borrow from here on
- Annual fees, late fees and over limit fees
- Introductory rates and the day they end
- Balance transfers and the fee for making one
- Rates that move, including every rate that is variable today
- Daily interest on the average daily balance, which is how a card statement accrues it
- Tax of any kind, including interest that is deductible where you live
- Money kept aside for emergencies, which paying every spare pound at a debt leaves you without