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Pick the debt and the year. This replays real interest rates and stock market returns, paying it off first or investing instead, to the latest month.
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The same amount each month on both paths; only where it goes first changes.
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You have a debt and a fixed amount to put towards your money each month. Pay the debt off as fast as you can and invest once it's gone, or pay only what the lender asks and invest the rest from the start? This calculator replays both with real interest rates and stock market returns. Pick the kind of debt, the year you had it, any January from 2000, what you owed and what you could pay each month, and it follows both paths to the latest month.
Both paths pay the same each month. Paying off first puts all of it on the debt until it's cleared, then invests it all. Investing instead pays the minimum and invests what's left: for a loan, the monthly payment that clears it over its term (3 years for a personal loan in the US, 4 for a car loan or a UK personal loan, 10 for a student loan); for a credit card, the interest plus 1% of the balance, at least £25 or $25. The result compares net worth: investments less what is still owed.
The interest rate starts at the average for that kind of debt in the month you pick, tagged AVG, and you can type your own. A loan keeps its rate; a credit card's rate moves with the average each month unless you type one. Investing follows the S&P 500 with dividends reinvested, converted to pounds in the UK, tax-free as in an ISA or a Roth IRA, with no fees. Rates: Bank of England (UK) and the Federal Reserve and Department of Education (US).
These use the calculator's starting figures for one UK case and one US case, and are refreshed when the data updates.
Had you invested instead of paying off your £5,000 credit card first, with £300 a month for both from January 2015, by August 2026 you'd have £2,735 less: £76,201 investing, against £78,936 paying it off first.
Had you invested instead of paying off your $5,000 credit card first, with $250 a month for both from January 2015, by August 2026 you'd have $1,130 less: $64,532 investing, against $65,662 paying it off first.
It turns on the interest rate against what the market returned while you had the debt. "How it played out" gives the break-even rate for the years you pick: the debt rate above which paying it off first came out ahead. Credit card rates have almost always been above it; cheap car and student loans often below.
Choose a car or student loan and type your rate. At 3% or 4%, investing instead has usually come out ahead over long spells, though not every time: someone investing just before 2008 would have done better paying the loan off. Paying off is a guaranteed return equal to the rate; the market isn't guaranteed.
Paying off the card, in almost every year since 2000. Card rates have run around 15% to 25%, above what stocks returned over most spells. Pick "Credit card" above to see how far ahead paying it off came out.
In the US, pick "Student loan": it starts at the federal Direct Loan rate for that academic year, repaid over ten years. UK student loans are repaid as 9% of pay above a threshold and written off after 25 to 40 years, so paying them off early works differently; see the college ROI calculator for how they are repaid.