Debt Payoff Calculator Canada 2026
Enter your debts and compare the avalanche method (highest interest first) against the snowball method (lowest balance first). See exactly when each debt is paid off and how much interest you save.
Your Debts
📋 How to use this calculator
- Add each debt — credit card, car loan, student loan, line of credit, etc.
- Enter the current balance, interest rate, and minimum monthly payment.
- Set your extra monthly payment (any amount above the minimums).
- Click Calculate Payoff to compare strategies.
Your Results
Enter your debts and click Calculate Payoff to see your debt-free date.
Debt-Free In
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Months to Debt-Free
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Total payoff period
Interest Saved vs Min Only
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By adding extra payment
Time Saved vs Min Only
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By adding extra payment
Debt-Free Date
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Estimated payoff month
Payoff Order
| Month | Payment | Principal | Interest | Remaining |
|---|
Paying Off Debt in Canada
❄️ Avalanche Method
The avalanche method directs all extra payments toward the debt with the highest interest rate, while paying minimums on all others. Once the highest-rate debt is paid off, you roll that payment onto the next highest rate. This method is mathematically optimal — it minimizes the total interest you pay over the life of your debts. If you have credit card debt at 19.99% alongside a car loan at 5.99%, every extra dollar put toward the credit card saves nearly $0.20 per year in perpetuity, compared to about $0.06 on the car loan.
⛄ Snowball Method
The snowball method pays off the smallest balance first, regardless of interest rate. Once that debt is gone, its payment rolls onto the next smallest balance. The total interest paid is usually slightly higher than avalanche, but many people find the psychological momentum of eliminating debts completely to be more motivating. Research by Harvard Business Review found that people who use the snowball method are more likely to stay on track and complete their debt payoff. If motivation is a concern, snowball may be the better choice even if avalanche is mathematically superior.
🇨🇦 Common Canadian Debts and Typical Rates (2026)
| Debt Type | Typical Rate | Notes |
|---|---|---|
| Credit card (major bank) | 19.99% | Standard rate; some cards up to 29.99% |
| Low-rate credit card | 8.99–12.99% | Annual fee often applies |
| Personal line of credit | Prime + 2–5% | Variable; currently ~9–12% |
| Home Equity Line (HELOC) | Prime + 0.5–1% | Secured against home; lowest rate |
| Car loan (new vehicle) | 5.99–8.99% | Dealer financing; bank loans often lower |
| Student loan (Canada Student) | Prime rate | Interest-free since April 2023 on federal portion |
| Payday loan | Up to 600%+ APR | Maximum $14–$15 per $100 in most provinces |
❓ Frequently Asked Questions
Should I pay off debt or invest in my TFSA?
The general rule: if your debt interest rate is higher than your expected investment return, pay off debt first. Credit card debt at 19.99% is almost always worth eliminating before investing — no investment reliably returns 20%. However, if you have a low-rate mortgage at 4–5% and expect 7%+ returns in a TFSA, investing while making minimum debt payments can make sense. Many Canadians do both: pay down high-interest debt aggressively while making small regular TFSA contributions to preserve room and build the savings habit.
What is a debt consolidation loan in Canada?
A debt consolidation loan combines multiple debts into a single loan — ideally at a lower interest rate. In Canada, options include personal loans from banks or credit unions (typically 8–15%), balance transfer credit cards (often 0% for 6–12 months then 19.99%), or a HELOC if you own a home (typically prime + 0.5%). Consolidation simplifies payments and can reduce interest costs significantly, but requires discipline — many Canadians consolidate credit cards and then run them up again, worsening their situation.
Are there Canadian government programs to help with debt?
Yes. The federal government offers consumer proposals and bankruptcy protection through the Bankruptcy and Insolvency Act, administered by Licensed Insolvency Trustees (LITs). A consumer proposal allows you to negotiate repaying a portion of your debt over up to five years, avoiding bankruptcy. Credit counselling agencies — many non-profit — offer debt management plans and free counselling. The Financial Consumer Agency of Canada (fcac.gc.ca) provides free resources on managing debt.