Why does so little of my payment come off the balance?

Interest is charged first. On a $12,000 balance at 20% APR the first month costs about $200 in interest, so a $400 payment only removes about $200 of what you owe.

Is it better to pay extra or save the money?

Paying extra earns you a guaranteed return equal to the interest rate. At credit-card rates that beats almost any savings account, so clearing the debt usually wins — after you hold a small emergency buffer.

Does paying extra reduce my required payment?

Usually not. On most loans the required payment stays the same and the term shortens instead, which is where the interest saving comes from.

What if my rate changes?

This assumes a fixed rate. On a variable rate, rerun it at the new rate whenever it moves — the payoff date can shift a long way.

Debt Payoff Calculator

How long until it is gone, and what paying extra saves you.

Two numbers decide how long a debt lasts: the interest rate and the payment. Because interest is charged on whatever is left, most of an early payment goes to the lender rather than the balance — which is why a debt can feel like it barely moves for the first year.

Enter what you owe, the rate and what you pay each month. The result shows the payoff time and the total interest, and if you add an optional extra payment it shows exactly what that extra buys you in months saved and interest avoided.

Your numbers

Balance owed

Interest rate (APR)

Monthly payment

Extra payment each month (optional)

Time to clear

2 yr 7 mo

🇺🇸 US · USD

Monthly payment: $500.00
Total interest: $3,450.08
Total you will repay: $15,450.08
Interest as a share of the debt: 28.8%
Time saved by the extra payment: 11 mo
Interest saved: $1,320.15

Estimates only. Results from this calculator are for general informational purposes and are not tax, legal, accounting or financial advice. Rates change and individual circumstances vary — confirm figures with the CRA, the IRS, your state or provincial authority, or a licensed professional before acting on them.

How it's calculated

Monthly rate = APR ÷ 12
Each month: interest = balance × monthly rate, then balance = balance + interest − payment
The debt clears in the first month the balance reaches zero

A payment only reduces the balance by whatever is left after that month’s interest, which is why a higher rate stretches the term so sharply.

Frequently asked questions

Why does so little of my payment come off the balance?: Interest is charged first. On a $12,000 balance at 20% APR the first month costs about $200 in interest, so a $400 payment only removes about $200 of what you owe.
Is it better to pay extra or save the money?: Paying extra earns you a guaranteed return equal to the interest rate. At credit-card rates that beats almost any savings account, so clearing the debt usually wins — after you hold a small emergency buffer.
Does paying extra reduce my required payment?: Usually not. On most loans the required payment stays the same and the term shortens instead, which is where the interest saving comes from.
What if my rate changes?: This assumes a fixed rate. On a variable rate, rerun it at the new rate whenever it moves — the payoff date can shift a long way.

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