Debt Payoff Calculator
Use this debt payoff calculator to compare snowball and avalanche strategies. See total interest, payoff timelines, and how extra payments help.
For informational purposes only. Not financial advice. Calculations are estimates and may not reflect your exact situation. Consult a qualified financial adviser for personalised guidance.
About Debt Payoff Calculator
Add all your debts with their balances, interest rates, and minimum payments. The calculator compares the snowball and avalanche payoff strategies side by side, showing total interest, payoff timeline, and the effect of extra monthly payments.
Snowball vs Avalanche: How They Work
Both strategies make minimum payments on all debts, then throw any extra money at one target debt. The difference is which debt gets targeted first:
| Snowball | Avalanche | |
|---|---|---|
| Priority | Smallest balance first | Highest interest rate first |
| Total interest paid | Usually more | Usually less (mathematically optimal) |
| Psychological benefit | Quick wins build momentum | Slower early wins but faster overall |
| Best for | People who need motivation and visible progress | People focused on minimising total cost |
Worked example: Three debts with £300/month total budget:
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Credit card | £2,500 | 22% | £50 |
| Car loan | £8,000 | 6% | £150 |
| Personal loan | £1,200 | 9% | £40 |
Snowball order: Personal loan (£1,200) first, then credit card (£2,500), then car loan.
Avalanche order: Credit card (22%) first, then personal loan (9%), then car loan (6%).
The avalanche method typically saves £200-500 in interest on a debt profile like this, but the snowball method eliminates the personal loan in about 5 months, giving you an early win.
The Power of Extra Payments
Extra payments go directly to principal, reducing the balance that accrues interest. The effect compounds over time:
Example: £5,000 credit card at 20% APR, £100 minimum payment:
- Minimum only: 109 months (9 years), £5,840 in interest
- £50 extra/month: 44 months (3.7 years), £1,613 in interest
- £100 extra/month: 30 months (2.5 years), £1,028 in interest
- £200 extra/month: 19 months, £630 in interest
Just £50/month extra saves over £4,200 in interest and 5 years of payments. This is why the calculator prominently shows the impact of extra payments.
Finding Extra Money for Debt
Common sources of extra debt payments:
- Tax refunds: Direct the full amount to the target debt
- Work bonuses: Apply 50-100% to debt before spending
- Subscription audit: Cancel unused subscriptions (the average UK household wastes £30+/month)
- Selling unused items: Clothes, electronics, furniture on eBay/Facebook Marketplace
- Side income: Even a few hours of freelance work per month accelerates payoff
- Refinancing: Moving high-interest debt to a lower-rate loan frees up more for principal
Debt You Should Not Rush to Pay Off
Not all debt is equally urgent. Prioritise by interest rate and type:
| Debt Type | Typical Rate | Priority |
|---|---|---|
| Credit cards | 18-30% | Highest - pay off aggressively |
| Payday loans | 100%+ | Emergency - pay off immediately or seek advice |
| Store finance | 15-30% | High |
| Personal loans | 5-15% | Medium |
| Car loans | 3-8% | Medium-low |
| Student loans (UK) | Variable | Low - income-contingent, written off after 25-40 years |
| Mortgage | 3-6% | Low - long-term, tax-efficient in some cases |
UK student loans are a special case. Repayments are income-contingent and the balance is written off after 25-40 years. For many graduates, the loan is effectively a graduate tax, and overpaying makes no financial sense.
When to Seek Help
If you cannot make minimum payments, if debts are growing despite payments, or if debt is causing significant stress, free debt advice is available:
- UK: StepChange (stepchange.org), National Debtline (nationaldebtline.org), Citizens Advice
- US: National Foundation for Credit Counseling (nfcc.org)
These organisations can negotiate with creditors, set up manageable payment plans, and advise on options like DROs and IVAs (UK) or Chapter 7/13 bankruptcy (US).
Once debt-free, the savings goal calculator helps you redirect those payments into savings. The compound interest calculator shows how the same monthly amount grows when invested instead of servicing debt.
All calculations run in your browser. No financial data is stored or transmitted.
Frequently Asked Questions
What is the difference between snowball and avalanche methods?
The snowball method pays off the smallest balance first, giving you quick psychological wins. The avalanche method targets the highest interest rate first, which usually saves more money overall. Both apply freed-up payments to the next debt once one is eliminated.
Which debt payoff strategy saves the most money?
The avalanche method (highest interest first) almost always saves more in total interest. However, the snowball method can be more motivating because you eliminate individual debts faster. The calculator shows both so you can compare the actual dollar difference.
How do extra payments help?
Extra payments go directly toward principal, reducing the balance faster and cutting the total interest charged over time. Even a small extra amount each month can save significant money and shorten your payoff timeline by months or years.
Should I include all my debts?
Include any debts with interest charges - credit cards, personal loans, car loans, student loans. You can leave out interest-free debts or mortgages if you prefer, since they behave differently. The tool works best when comparing debts you want to actively pay down.
What if my minimum payment does not cover the interest?
If your minimum payment is less than the monthly interest charge, the debt grows over time instead of shrinking. The calculator will flag this. In that situation, you need to increase your payment above the interest amount or contact your lender about options.
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