Chase Debt Management Calculator: Get help picking your payoff strategy

According to the most recent Federal Reserve Bank of New York’s Household Debt and Credit Report, as of 2024, Americans collectively owe $17.9 trillion in household debt.

If you’re someone who’s carrying debt, know that you’re not alone. While it may seem hard to address, there are various debt management strategies available to help you navigate your financial situation.

Keep reading for more information on why you may want to prioritize tackling your debt (if you have any), different debt payoff strategies, and how you could use the Chase Debt Management Calculator as a helpful starting point.

First things first: What’s debt?

Debt is money you owe a person, a business, or the government. Typical forms of consumer debt include credit card debt, personal loans, mortgages, student loans, auto loans, and medical debt.

Though not always the case, many forms of debt, from credit cards to mortgages, accrue interest. The interest rate of your debt is essentially the cost of borrowing that money.

For instance, someone could have a mortgage with an interest rate of 7%. With that mortgage, they’ll be expected to pay a portion of their principal balance every month, along with the interest that accrues on the loan.

Why should I care about how much debt I have?

Those with debt may want to be mindful of some potential consequences. A few of the reasons you may want to be mindful of the amount of debt you have include:

Potential financial and emotional hardships from carrying debt beyond your ability to repay

Debt is money that needs to be paid back. If you find yourself in a situation where you’re carrying a high debt load that’s difficult to repay, that may be detrimental to your financial and emotional health.  

The impact of a high debt-to-income (DTI) ratio

Many lenders look at a data point called your debt-to-income ratio as one point that helps them assess your creditworthiness. Your DTI is the percentage of your gross monthly income that goes toward paying debts. To calculate your DTI, add all your monthly debt payments, such as auto loans, student loans, and monthly credit card payments. Next, divide that total by your gross monthly income. Your gross monthly income is your earnings before taxes and deductions are taken out. The resulting number from this calculation is your DTI, in the form of a percentage.

The formula is as follows:

(Monthly debts/gross monthly income) x 100 = DTI ratio (percentage)

As a general rule of thumb, it may be recommended to keep your DTI below 36%, which can help you to save money for other financial goals. If your DTI is above 36%, you could face consequences like less flexibility in your budget, limited eligibility for loans, or less favorable terms when you borrow or seek credit.

What’s the Chase Debt Management Calculator, and how can it help?

Deciding how you want to tackle your debt can be an important first step in your debt management journey. One of the digital tools you can consider using to help you figure this out is the Chase Debt Management Calculator. The tool, which may be helpful for navigating credit card debt repayment can help you understand the following:

• If the debt snowball or avalanche method could be a helpful repayment method for you
• How long it’ll take to pay off your debt based on the monthly payments you’re making
• How much interest you’ll accumulate during this time based on the monthly payments you’re making
• How making increased payments could change your debt payoff time and the interest you accumulate on your debt

How to use the Chase Debt Management Calculator

Here are a few steps you can take to help make the most of the calculator.

1. Understand two common debt payoff strategies: snowball and avalanche

There are two common debt payoff strategies — the debt snowball method and the debt avalanche method — and this digital tool can help you determine if one of them could be a helpful debt payoff method.

With the debt snowball method, the goal is to pay off your smallest debt balance first. This method might help you stay motivated with quick wins and reduce the number of debts you have.

With the debt avalanche method, you prioritize paying down your debt with the highest interest rate first to help you save on interest over time.

2. Take the debt payoff quiz

If you’re unsure if the snowball or avalanche method is a better fit for your situation and goals, use the tool’s quiz to help figure out the best option. In the quiz, you’ll answer a few questions, such as if you’re looking to reduce your number of debts or save on interest. The quiz will then recommend whether the snowball or avalanche method could be better suited for you.

3. Simulate your debt payoff journey

The tool has a simulation feature that can tell you how long it will take to pay off an outstanding balance, such as the balance on a credit card along with how much interest you’ll end up paying. You’ll enter the information on a particular debt you want to prioritize, including the following:

• Your debt balance
• Your debt’s annual percentage rate (APR)
• The monthly payment you want to make toward the debt

With that information, the calculator will supply you with how long it will take you to pay off your debt, how much in interest you’ll pay on the debt, and the total amount you’ll pay in principal and interest. You can also simulate paying more every month to see how much you can reduce the amount you’re going to pay in interest and how paying more may help reduce the timeline for paying off the debt.

4. Start your debt payoff journey

Armed with information about whether the debt snowball or avalanche method may be right for you and how much increasing the amount you’re putting towards your debt monthly can help you, hopefully, you can be better positioned to start tackling your debt in a way that feels right for you.

Final thoughts

No matter where you are in your debt journey, know there are an assortment of debt payoff strategies you can try. As shared above, you may want to consider trying the debt snowball method or the debt avalanche method, to work towards paying off your debt.

At the end of the day, it may feel daunting to start your debt payoff journey but know that taking that first step may help you progress forward.