Methodology

Products covered

This methodology covers the Debt Payoff Planner, the Credit Card Payoff Calculator, the Credit Card Minimum Payment Calculator, the Credit Card Extra Payment Calculator, and the Savings Goal Calculator. Debt tools share pure repayment calculations, while the Savings Goal Calculator uses a separate pure savings projection engine. Valid inputs produce deterministic results without a React or AI dependency.

Shared interest and payment assumptions

The estimated monthly interest rate is APR divided by 12. For each modeled month, estimated interest equals the opening balance multiplied by that monthly rate. Interest is applied before the monthly payment, monetary records are rounded to cents, and the final payment is reduced to the amount required to bring the balance to zero.

Payments never create a negative balance. A calculation stops when all included balances reach zero and includes a maximum-duration guard to prevent an endless schedule.

Debt Payoff Planner

Each debt uses a name, debt type, current balance, APR, and minimum monthly payment. The plan also uses a first payment month, an optional extra monthly payment, and a Snowball, Avalanche, or Compare Both selection.

Every active debt first receives up to its stated minimum payment. Remaining monthly budget is sent to the current priority debt. When a debt is paid off, its former minimum payment remains in the total monthly budget and rolls to the next priority debt. Debt Snowball prioritizes the smallest active balance. Debt Avalanche prioritizes the highest active APR. Stable tie-breakers keep repeated calculations consistent.

Credit Card Payoff Calculator

The single-card calculator uses current balance, APR, regular monthly payment, optional extra monthly payment, and start month. It applies the regular and extra amount as one modeled monthly payment and returns an estimated debt-free date, total interest, total paid, balance history, principal and interest allocation, and a monthly payoff schedule.

The calculator does not model changing statement minimums, multiple payments within a billing cycle, promotional APR expiration, balance-transfer fees, deferred interest, or new purchases.

Baseline comparisons and savings

A baseline is a separate calculation used only for comparison. In the Debt Payoff Planner, interest saved and time saved compare the selected strategy and extra payment with the same debts and strategy using no extra monthly payment. Interest difference and time difference compare Snowball with Avalanche using the same debts and monthly budget.

In the Credit Card Payoff Calculator, the baseline uses the regular monthly payment without the optional extra amount. What-if cards add the displayed amount to the regular payment and rerun the full schedule. Savings equal the difference between the baseline result and the alternative result; they are not generated text or a guaranteed outcome.

In the Credit Card Minimum Payment Calculator, the baseline applies the selected dynamic minimum-payment policy without an extra payment. The accelerated scenario applies the same policy plus the optional extra monthly amount. Time saved and interest saved are the differences between those two complete schedules.

In the Credit Card Extra Payment Calculator, the baseline uses the entered current monthly payment with no added contribution. The accelerated scenario uses the same inputs and adds either a recurring monthly amount or one one-time payment in the selected modeled month. Time saved, interest saved, first-year differences, and avoided interest per extra dollar are derived from those two complete schedules. Avoided interest per extra dollar is an estimate of interest difference divided by extra principal actually applied, not an investment return or guaranteed benefit.

Credit Card Extra Payment Calculator

The extra-payment calculator uses current balance, APR, current fixed monthly payment, start month, and one selected comparison mode. Recurring mode adds the entered amount each modeled month. One-time mode adds a single payment after estimated monthly interest and the regular payment are applied in the selected month. Any unused amount above the remaining balance is not counted as contributed, and the final payment is reduced to the exact amount required.

Payoff-goal mode solves for the smallest additional monthly amount, rounded to cents, that reaches the selected month under the same engine. It uses a deterministic binary search and verifies each candidate by running the shared repayment schedule. It does not use a separate closed-form formula. A target already reached by the current payment returns zero required extra payment.

When the monthly-versus-one-time comparison is shown, the recurring scenario applies the selected extra amount for 12 modeled months while the one-time scenario applies the same nominal total in the first modeled month. This timing comparison does not account for cash availability, emergency savings needs, taxes, opportunity cost, or lender-specific payment allocation and is not a recommendation to use a lump sum.

Credit Card Minimum Payment Calculator

The minimum-payment calculator supports four educational policies: the greater of 1% of current balance plus monthly interest or $35; the greater of 2% of current balance or $35; a fixed monthly payment; and a custom percentage-of-balance formula with a dollar floor. The first policy is a representative issuer-style model and the 2% policy is explicitly illustrative. Neither is presented as your issuer's actual requirement. Percentage-based payments are recalculated from the opening balance in every modeled month.

The engine applies monthly interest first, calculates the required minimum for that month, adds any optional extra payment, and reduces the final payment to the amount still owed. It rejects a payment policy that does not reduce the balance under the selected APR. The baseline schedule uses the selected policy alone. The comparison schedule uses that same policy plus the optional fixed extra amount each month. Time saved and interest saved are differences between those two complete schedules. Issuer fees, new purchases, multiple APR buckets, promotional terms, and issuer-specific formula variations are not modeled.

Very long payoff periods can be mathematically possible when a percentage-based payment decreases with the balance and approaches the dollar floor slowly. The interface flags an estimated minimum-only payoff longer than 30 years as an unusually long educational scenario. It should be checked against the minimum-payment warning and formula on the current statement.

Savings Goal Calculator

The Savings Goal Calculator accepts a target amount, current savings, contribution frequency, optional expected APY, and either a target month or regular contribution. APY is converted to an equivalent periodic rate using the selected 12, 26, or 52 contribution periods per year. Each modeled period applies estimated interest to the opening balance, then adds the contribution. Monetary records are rounded to cents.

Goal-date mode projects forward with the entered recurring contribution until the target is reached. Target-date mode uses a deterministic cents-based binary search to find the smallest recurring contribution that reaches the target within the available periods. Each candidate is verified through the same projection engine used by goal-date mode. At 0% APY, the required contribution reduces to the target shortfall divided by the number of contributions.

The model treats contributions as occurring after estimated interest in each period and caps the final contribution at the remaining amount needed. It does not reproduce a bank's daily balance method, posting schedule, rate changes, taxes, fees, withdrawals, skipped contributions, or account-specific terms. A maximum 100-year projection guard prevents an endless schedule.

Emergency Fund Calculator

The Emergency Fund Calculator multiplies essential monthly expenses by the selected whole-number coverage period. It shows 3-, 6-, and 9-month comparison scenarios and supports a custom period from 1 to 24 months. Current emergency savings reduce the remaining amount, and progress equals current savings divided by the selected target, capped at 100%.

Timeline projections reuse the Savings Goal Calculator's monthly savings engine. The model converts APY to an equivalent monthly rate, applies estimated interest to the opening balance, adds the monthly contribution, rounds monetary values to cents, and stops when the target is reached. A positive monthly contribution is required for an emergency-fund completion date, even when an APY is entered. Results exclude withdrawals, changing expenses or APYs, fees, taxes, and account-specific crediting rules.

Validation rules

Balances and required payments must be positive, APR must be between 0% and 99%, and extra payments cannot be negative. The multiple-debt planner accepts up to 20 debts. A calculation returns an error when a stated payment is not sufficient to reduce the balance under the simplified monthly-interest assumption.

Optional AI Insights

AI Insights are not part of the core calculation. Before an external request, MonetAdvice creates calculation-based payment and strategy scenarios with the deterministic engine. If the user requests AI Insights, a limited scenario summary can be sent through a MonetAdvice server endpoint to Google Gemini with Google Search grounding. The summary can contain debt types, balances, APRs, minimum payments, extra payment, selected strategy, first payment month, and calculated results. User-entered debt names and direct personal identifiers are excluded.

A sourced market finding is displayed only when required terms and a source URL are present and the finding passes structured checks. Any estimated financial impact is recalculated by MonetAdvice code. AI is not permitted to claim eligibility, guarantee an advertised rate, or replace lender disclosures. See the Privacy Policy for provider processing details.

Important limitations

Actual lenders may use daily periodic rates, average daily balances, variable APRs, promotional periods, fees, different statement dates, changing minimum-payment formulas, and lender-specific payment allocation. The models do not assess credit eligibility, hardship, settlement, bankruptcy, taxes, credit-score effects, legal rights, or whether a refinancing product is suitable for a particular person.

Storage, CSV, and print output

With Functional storage allowed, the latest valid calculator inputs can be restored on the same device. Storage does not change formulas or results. CSV and print views are generated from the displayed deterministic schedule and are convenience exports, not lender records or evidence that a payment was made or allocated as estimated.

Editorial review status

MonetAdvice methodology and calculation documentation are maintained by Pavel Shareika. Calculation logic is covered by automated tests, and material assumptions and limitations are documented. An independent credentialed financial review has not yet been published.