by Dave Ramsey
A step-by-step plan for getting out of debt and building wealth.
Debt Payoff Calculator
Find your exact debt-free date using snowball or avalanche methods. See how extra payments cut interest and save you months.
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How Extra Payments Accelerate Payoff
When you make only minimum payments, most of your money goes to interest, barely touching the principal. Every extra dollar you pay goes directly toward reducing your balance, which means less interest accrues next month. Even an extra $100/month on a $5,000 credit card balance at 23% APR can save you over $3,000 in interest and cut your payoff time by more than half.
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Credit Card vs Student Loan vs Auto Loan Interest
Credit cards carry the highest interest rates, typically 20–30% APR. Student loans range from 4–8% for federal loans. Auto loans usually fall between 5–10% depending on credit and whether the car is new or used. This difference matters enormously: $10,000 at 23% costs $2,300/year in interest, while the same amount at 5.5% costs just $550. Always prioritize paying down the highest-rate debt first if you want to minimize total interest. Compare your options on NerdWallet.