When you’re choosing a strategy for paying your debt, it all comes down to the numbers – the payment you’ll have to send each month, the amount of interest you’ll ultimately pay, and the number of months (or years) it will take to completely pay off all your debt. You can take the guesswork – and complex calculations – out of the process by using an online debt reduction calculator like the one from CNN Money. The tool is simple to use and lets you calculate your debt repayment in various scenarios.

Calculating Minimum-Only Repayment Plan

Consider this hypothetical situation: 3 credit card balances of \$5,000; \$10,000; and \$15,000 (total \$30,000) and interest rates of 12.9%, 17.9%, and 24.9% respectively.

You could use CNN Money’s calculator to figure out how long it would take you to pay off these balances making only the minimum payment. We’ll assume 3% minimum payments for all these credit cards, which would total \$900 in minimum payments for all three balances.

If you make only the minimum payment, it will take you 30 years and 9 months to pay off your balance. By the time you finish paying your balance, you’ll have paid \$41,056.44 in interest. In other words, you’ll pay a total of \$71,056.44 even though the balance you began with was only \$30,000. “Minimum-only payments” is the most expensive repayment plan.

Time to Pay With Additional Payment

You can also use CNN Money’s calculator to determine how long it would take you to pay off your balance based on the payment you’re currently making, that’s more than the minimum. For example, let’s say you’re sending an extra \$50 on top of the minimum for each of these accounts. Just enter your current monthly payment instead of the minimum payment in the table, but still choose the minimum payment option to calculate your plan. Sending \$50 extra to each card every month would cut your repayment time down to 23 years and the total interest paid down to \$30,468.45.

Paying extra every month is good, but spreading it among all your credit cards isn’t the most effective way to pay off your debt. Instead, you should send all extra payment to one credit card until you pay it off. Then, put everything you were paying toward the first debt to another debt, and so on. Using this strategy and still paying \$150 extra on your debt each month, you’d pay off your debt in 3 years and two months, reducing your total interest payments to \$9,694.

Effect of a Debt Consolidation Loan

What if you could consolidate your debt with a lower interest rate consolidation loan? You can use the calculator to see the effect of this, too. Instead of entering three credit cards, just enter one debt for the total amount of your balances and the interest rate you anticipate, e.g. \$30,000 at 9%. You can enter anything for the minimum payment.

Then, in the “Choose a plan” section, enter the loan repayment period, e.g. 5 years, and press Calculate to get the monthly payment. In this scenario, your monthly payment would be \$618.11, about \$300 less than your initial minimum payment. You’d pay only \$7,068 in interest. As you see, consolidating your debt with a low interest rate loan lowers your repayment well below what it would be if you were making minimum payments.

Debt Settlement Savings

With a 60% debt settlement, your repayment time and debt settlement amount would be reduced. You’d pay about \$18,000 on your \$30,000 debt. You could pay off your debt in 3 to 4 years, reducing your monthly payment to between \$375 and \$500.

Doing this type of comparison helps you decide between various debt relief options. You can pick the repayment plan that’s most affordable and saves you the most interest!

This guest post was written by Frank Collins, who specializes in topics related to personal finance, debt relief, credit repair and more. Pass through the debt settlement blog for more tips and advice!