What this calculator works out
Both methods pay the minimum on every debt, then put every spare pound towards one debt at a time. They differ in which debt comes first.
- Avalanche — highest interest rate first. This always costs the least interest.
- Snowball — smallest balance first. Whole debts clear early.
The method, in full
The calculator simulates each month. For both methods, it does four things:
- Add interest to every outstanding balance.
- Pay the minimum on every debt that still has a balance, in the order you entered them, capped at the balance owed.
- Send everything left over to the target debt — the highest APR under the avalanche, the smallest balance under the snowball. If that debt clears mid-month, the remainder goes to the next target.
- Repeat until every balance is zero, recording the month each debt cleared and the interest each one cost.
Both methods speed up as they go: when a debt clears, its minimum payment joins the spare money going to the next one. A simple ‘total debt divided by monthly payment’ sum misses this.
How the interest is calculated
An APR is an effective annual rate — the rate you would pay over a year with compounding included. So the equivalent monthly rate is not the APR divided by twelve. It is:
The monthly ratemonthly rate = (1 + APR)1/12 − 1
On a 24.9% APR card that is 1.868% a month, not the 2.075% you would get by dividing by twelve. Dividing by twelve overstates the interest and exaggerates the saving.
Interest is applied to the balance at the start of each month, before payments are made. That is slightly conservative — a real card charges daily on the running balance — and it means the answer errs towards showing more interest rather than less.
Assumptions
- Minimum payments are held flat. Real card minimums are often a percentage of the balance and fall as the balance does. Holding them flat is the standard approach for this comparison and it treats both methods identically, so the difference between them is sound. Your absolute payoff dates may be slightly optimistic against a falling minimum.
- The monthly amount stays the same throughout. No pay rises, no windfalls, no lean months.
- No new borrowing. The calculator assumes nothing new goes on the cards.
- No fees, charges or promotional rates. Annual fees, late fees and 0% introductory periods are not modelled. A 0% balance transfer changes the picture substantially — enter the post-transfer APR if you have one.
- Overpayment penalties are ignored. Many personal loans allow overpayment but some charge for it; check your agreement before you redirect money to a loan.
- Your figures stay in your browser. Nothing is sent to a server.
Choosing a method
If the difference the calculator shows is small, the snowball costs little extra. If the difference is large, the avalanche saves that amount.
Priority debts come before both methods. Missing rent, mortgage, council tax, energy or tax payments can lead to eviction, bailiffs or court. Our guide to clearing debt sets out the priority order in full.
If the numbers do not work
If the calculator tells you your monthly amount is below your minimum payments, or that the debts never clear, the situation needs specialist help. StepChange and National Debtline are free, independent and confidential, they negotiate with creditors on your behalf, and they can arrange formal solutions. Never pay a company to do what those two do for nothing. Coaching can help afterwards, once the immediate pressure is off and the question becomes how to stop it happening again. Our money worries page lists who to call first and what to have ready.