Debt Avalanche Calculator
The debt avalanche method targets your highest interest rate debt first, saving the most money overall. You pay the minimum on all debts, then direct any extra money at the highest-rate debt. When it's cleared, you roll that payment into the next highest rate — like an avalanche gathering force.
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Related: Debt Snowball · Minimum Payment
How the debt avalanche calculator works
The debt avalanche method is mathematically the most efficient way to eliminate multiple debts. The strategy is straightforward: pay the minimum required on every debt each month, then direct any remaining money at the debt with the highest interest rate. Once that debt is cleared, you roll its minimum payment into the next highest-rate debt — building momentum like an avalanche.
This approach minimises the total interest you pay over the life of your debts, which is why it wins on pure cost compared to the debt snowball method. The snowball method targets the smallest balance first, which can clear individual accounts faster and provide quicker motivational wins — but at a higher overall interest cost.
Consider two debts: £2,000 at 24% APR and £5,000 at 8% APR. The avalanche method attacks the £2,000 at 24% first, even though it is the smaller balance. Paying down the high-rate debt faster drastically reduces the interest accumulating each month, saving more overall compared to starting with the larger but cheaper £5,000 balance.
Frequently asked questions
How does the debt avalanche differ from the debt snowball?
The debt avalanche targets the highest interest rate debt first, while the debt snowball targets the smallest balance first. The avalanche method saves more money in total interest paid over the repayment period. The snowball method clears individual accounts faster, giving quicker psychological wins that some people find motivating enough to stay on track.
How much interest can I save with the avalanche method?
It depends on your balances and interest rates. Compared to making minimum payments only, the avalanche method can save hundreds to thousands of pounds. The higher your interest rates and the more extra payment you can apply each month, the greater the saving. Use this calculator to see your exact savings based on your specific debts.
What if two debts have the same interest rate?
If two debts share the same interest rate, target the smaller balance first as a tiebreaker. This also aligns with snowball logic and clears an account sooner, which can help with motivation and simplify your finances by reducing the number of open accounts.
Should I consolidate debts instead?
A consolidation loan at a lower rate than your current debts can reduce total interest paid and simplify repayments into a single monthly payment. Compare the consolidated rate and term against your avalanche results to see which approach saves more money in your specific situation. Watch out for arrangement fees and early repayment charges on existing debts.