Formula
Each month, the open balance that is smaller receives the extra payment:
Months = count until both balances are zero
This is the snowball order, not the highest-rate order. The count stops at 50 years.
Assumptions
- Only two debts.
- The extra payment is available every month.
Worked example
A $500 balance and a $2,000 balance, with $100 extra on the smaller one, clear in 1 year 8 months.
Input definitions
- Minimum
- The required payment on that debt before any extra.
- Extra payment
- Added to whichever balance is smaller that month. Zero is allowed.
Limitations
This is an estimate, not a loan offer, tax filing, or investment advice. The currency control changes the symbol only.
Questions
Why the smaller balance instead of the higher rate?
That is the snowball rule. Paying the higher rate first is a different order.
What if a minimum does not cover interest?
The form asks you to raise it. Otherwise that balance grows.