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Should you pay off a debt or save?

Compare the interest you avoid by paying off a debt with what you'd earn by saving.

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Educational estimate based on the data you enter. It doesn't include taxes or future changes. It's not an offer or personalized advice.

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How it's calculated

Interest you avoid = Amount × ((1 + debt rate)^(months/12) − 1). Savings earnings = Amount × ((1 + savings rate)^(months/12) − 1). We compare the two numbers.

Paying off a debt is the same as earning a guaranteed return equal to its rate. If the debt costs more than your savings earn, paying off usually wins.

Watch out for this

  • Don't leave yourself without an emergency fund to pay off a debt: if something unexpected comes up, you'll end up in debt again.
  • Check whether there's a fee for paying off the debt early.

Frequently asked questions

Questions about this calculator

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What if savings earn more than the debt costs?

Then keeping the debt and saving might give you more, but with risk: the savings rate can drop, while the debt's rate is a certain cost.

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