See how quickly you can become debt-free by paying off up to three debts using the avalanche method (highest interest rate first).
This calculator shows how long it would take to become debt-free across up to three separate debts (such as credit cards, lines of credit, or loans), using the "avalanche" method - directing any extra payment toward the debt with the highest interest rate first - and how much total interest you'd pay along the way.
Each month, every debt is charged interest on its remaining balance, and its minimum payment is applied (interest first, then principal). Any extra payment - plus the minimum payments freed up from any debts that have already been paid off - is then directed entirely toward the debt with the currently highest interest rate, paying it down faster. Once that debt is paid off, the extra payment "avalanches" onto the debt with the next-highest rate, and so on, until all debts reach zero.
Formula: Each month, for each debt: Interest = Balance × (Rate ÷ 12); Payment = min(Minimum Payment, Balance + Interest); Principal Paid = Payment − Interest; new Balance = Balance − Principal Paid. Then, any Extra Payment (plus freed-up minimums from paid-off debts) is applied entirely to the remaining debt with the highest interest rate. Repeat until all balances reach zero.
Example: Two debts - a CA$5,000 balance at 20% with a CA$150 minimum payment, and a CA$8,000 balance at 12% with a CA$200 minimum payment - with an extra CA$100/month directed using the avalanche method, would be fully paid off in about 36 months (3 years), with total interest of roughly CA$3,011 across both debts combined. (Note: this example is for illustration purposes only.)
The avalanche method modelled by this calculator - paying minimums on everything and directing extra money to the highest-interest debt first - is mathematically optimal, minimizing total interest paid across all your debts. An alternative popular approach is the "snowball" method, which directs extra payments to the smallest balance first regardless of its interest rate, aiming to build momentum and motivation through quick wins by eliminating individual debts faster, even if it costs slightly more in total interest. Common Canadian debts that benefit from a structured payoff plan include credit cards (often 19.99%-22.99% APR - see our Credit Card Payoff Calculator and Credit Card Calculator), lines of credit (often prime rate plus a margin), and personal loans (see our Personal Loan Calculator). If your combined minimum payments are unmanageable relative to your income, options beyond accelerated payoff include a debt consolidation loan at a lower blended rate (see our Debt Consolidation Calculator), or speaking with a non-profit credit counselling service, which can help negotiate with creditors or set up a structured debt management plan - this is different from a for-profit debt settlement company, and it's worth understanding the distinction and any fees involved before signing up with either.
The avalanche method directs any extra payment (beyond minimums) toward the debt with the highest interest rate first. Once that debt is paid off, the extra payment (plus its freed-up minimum payment) moves to the debt with the next-highest rate, and so on. This approach minimizes the total interest paid across all your debts compared to other strategies, assuming you stick with it.
Avalanche targets the highest-interest debt first, minimizing total interest paid. Snowball targets the smallest balance first regardless of rate, aiming to build momentum by eliminating individual debts quickly. Avalanche is mathematically more efficient, but snowball can be more motivating for some people - the "best" method is often the one you'll actually stick with.
This calculator supports up to three debts. If you have more, you could group smaller debts together (combining balances and using a weighted-average rate as an approximation), or run the calculation for your largest/highest-rate debts first and handle smaller ones separately. For a more precise multi-debt plan, a spreadsheet or dedicated debt-tracking tool may be more practical.
Generally, paying down debt - especially revolving debt like credit cards - tends to improve your credit utilization ratio over time, which can positively affect your credit score. However, closing accounts entirely after payoff can sometimes have mixed effects on your credit history length and available credit, so consider whether to close or keep (and not use) a paid-off credit card.
It depends on whether you can get a consolidation loan at a meaningfully lower blended interest rate than your current debts, and whether you have the discipline to not run up new balances on paid-off credit cards. Consolidation can simplify payments and potentially reduce interest, but if your current rates are already low or a consolidation loan comes with fees, the avalanche method on your existing debts might be comparable or better - see our Debt Consolidation Calculator to compare.
If your extra payment is CA\$0, this calculator will show how long it takes to pay off your debts using only minimum payments - which, especially for credit cards with percentage-based minimums, can take a very long time and cost significant interest (see our Credit Card Calculator for that scenario in detail). If minimums alone are difficult to manage, consider contacting a non-profit credit counselling service for free guidance on your options.
Disclaimer: The information and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. Interest rates and minimum payments used are examples only and do not represent your actual debts. This calculator assumes consistent payments with no new charges or missed payments. If you are struggling with debt, consider contacting a non-profit credit counselling service or a qualified financial adviser for advice specific to your situation.