Debt Payoff Calculator

The avalanche method (clear the highest-interest debt first) saves you the most money in pure mathematical terms. On £15,000 of mixed debt at typical rates (a credit card at 24.9% APR, a personal loan at 9.9%, a car finance balance at 6.5%), avalanche saves around £1,200 in interest versus snowball over the payoff period. Snowball (clear the smallest balance first) is slower mathematically, but it gives you a quick win in the first 6 to 12 months, which dramatically improves the chances of actually finishing the plan.

Choose avalanche if you are emotionally steady, comfortable with a long timeline before the first debt clears, and motivated by saving money. Choose snowball if you have ever quit a budget, started and stopped a payoff plan, or know you need momentum to stay engaged. The best strategy is the one you will actually finish, and behavioural finance research has consistently shown snowball completion rates are higher in real-world studies despite the worse maths. The calculator runs both side by side, so you can see exactly how much extra interest snowball will cost in your specific case before you decide.

Each debt is treated as a separate amortising balance with monthly compound interest. Your monthly budget is split into minimum payments on every debt plus an 'attack' payment on whichever debt the chosen strategy targets first. Once that debt clears, the freed-up minimum payment plus the attack amount roll forward onto the next target. This is the snowball or avalanche 'roll-up' effect, and it is what gives both strategies their power.

On £20,000 of debt at an average 18% APR with a £500 monthly budget, you are looking at roughly 5 years 2 months to clear with avalanche, paying around £10,400 in total interest. The same setup with snowball clears in around 5 years 4 months at £11,100 interest. Less than two months of difference, around £700 in extra interest. For some debt mixes the gap is much smaller (a few pounds), for others much larger (a couple of thousand). The year-by-year timeline in the tool shows your remaining balance and total interest accrued at the end of each year.

Some debt should not be aggressively paid early. A 0% balance transfer card has zero interest until the promo period ends, so paying anything more than the minimum during that window is a bad use of cash. UK student loans (Plan 2 and Plan 5) are income-contingent and many graduates never repay in full; voluntary overpayments are usually wasted money. Help to Buy mortgages and shared-ownership loans often have low subsidised rates that should not be priority targets.

An emergency fund usually trumps debt payoff, even high-interest debt. If you have no cash buffer, the next car repair or boiler breakdown will go straight onto the credit card you just cleared, and you will be back where you started but more demoralised. Most personal finance experts recommend at least one month of essentials in cash before any aggressive debt attack, then 3 to 6 months once the worst debt is gone. The [savings burndown](/savings-burndown) tool helps work out how long an emergency pot would last, and the [compound interest calculator](/compound-interest-calculator) shows how that pot grows once your debt is cleared and you redirect those payments into investing.

If you can consolidate £20,000 of mixed debt at 18% APR onto a personal loan at 8% APR, you save thousands and the payoff timeline looks dramatically better. The maths is real, but two warnings: consolidation only works if you do not run the cleared cards back up (which most people do within 18 months according to lender data), and the headline rate quoted in advertising is the representative APR offered to 51% of accepted applicants, not necessarily the rate you will get. Soft-search the rate first before applying, because hard searches affect your credit file.

Balance-transfer cards are the other consolidation route. A 0% balance transfer for 24 months at a 3% transfer fee on £5,000 of credit card debt means £150 in fees but no interest for two years, saving roughly £2,200 versus paying it on a standard credit card. The catch: the calculator will show this as huge savings only if you include the fee as upfront cost, and only if you actually clear the balance in the promo window. Roll into a second balance transfer when the first ends if you cannot, but each transfer adds another fee and requires an active credit check. The [mortgage calculator](/mortgage-calculator) is the right comparison if you are considering a debt consolidation loan secured against your home (do not, for almost any normal level of consumer debt, but the tool exists to model the cost if you were to).