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 — See Strategies →.