Paying more than the minimum shortens any loan and avoids interest. Enter your balance, rate and payments to see months saved and interest avoided.
Extra payments hit hardest on high-rate debt — €100 extra against a 20% card balance is a guaranteed 20% return. That usually beats investing the same money.
With several debts, the avalanche method (highest rate first) minimizes cost, while the snowball (smallest balance first) maximizes motivation. Both beat paying minimums.
The guaranteed-return framing has one important qualification: it is a return in the sense of money not spent, not money received. Clearing a card frees the payment for other uses but produces no asset, which matters if the alternative use was building the emergency fund that stops the card being used again.
Whether an extra payment shortens the term or lowers the payment is a lender setting, not a law, and the two are very different outcomes. Recasting a mortgage after a lump sum lowers the monthly figure and keeps the term; applying it to principal keeps the payment and ends the loan earlier. Ask which one applies before paying.
Some debts also carry early-repayment charges, particularly fixed-rate mortgages inside their fixed period, and many allow a percentage of the balance to be overpaid each year without penalty. Checking that allowance first is what makes the difference between an overpayment that saves interest and one that buys a fee.
Frequently asked questions
Avalanche or snowball — which payoff method is better?
Avalanche (highest rate first) minimizes total interest; snowball (smallest balance first) delivers quicker wins and better motivation. Mathematically avalanche wins; the best method is the one you stick with.
Should I pay off debt or invest?
Compare the debt's interest rate with a realistic after-tax investment return. Paying off a 20% card is a guaranteed 20% return — almost always the better deal. Low-rate mortgages are the genuine judgement call.
Do extra payments shorten the loan or lower the payment?
Typically they shorten the term while the payment stays the same — which is what saves interest. Some lenders let you choose; confirm the extra goes toward principal.