Avalanche method

After paying the minimum on every debt, any extra goes to the debt with the highest APR. Once that debt clears, the freed minimum rolls into the next highest-APR debt, and so on. This is the mathematically optimal approach: it minimises total interest paid over the full repayment period. For most debt mixes, the difference between avalanche and snowball in total interest is modest, but it is always in avalanche’s favour.

Snowball method

After paying the minimum on every debt, any extra goes to the debt with the smallest outstanding balance. This clears individual debts faster, which can provide a sense of progress and reduce the number of separate accounts you are managing. Research into debt repayment behaviour suggests the snowball method produces better long-run outcomes for some people precisely because of this motivational effect, even though it typically costs a little more in total interest.

The roll-over effect

In both strategies, when a debt clears its minimum payment is automatically redirected to the next target debt. This is sometimes called the debt roll or snowball roll. It means your total monthly outgoing stays roughly constant throughout the repayment period, but progressively more of it goes toward the target debt. The milestones section below the chart in multiple debts mode shows when each individual debt is projected to clear.

What to enter in the table

Enter the current outstanding balance and the APR stated on your most recent statement for each debt. For the minimum payment, use the amount your lender currently requires each month. If you are already paying more than the minimum on some debts, enter the higher figure. A warning will appear if the minimum payment entered is too low to cover the monthly interest on that debt at the APR shown.

How it works

Dragging the slider adds the selected amount to your standard monthly payment throughout the full remaining term. The chart immediately updates to show both the standard and overpayment balance trajectories. The four tiles below the chart update to show total balance, standard payoff time, total interest at standard payments, and the months saved and interest saved by the extra payment. The teal overpayment line on the chart falls more steeply and reaches zero earlier than the navy standard line.

Why early overpayments matter most

In the early months of a loan, a larger proportion of each payment goes to interest rather than reducing the balance. Any overpayment at this stage reduces the balance on which future interest is calculated, creating a compounding saving over every subsequent month. The same nominal extra payment applied early in the term saves more in total than the same payment applied later. This is illustrated clearly by comparing the trajectory of the overpayment line on the chart in the early months.

Practical considerations

Before making regular overpayments on a personal loan, check whether your agreement permits this and whether an early repayment charge applies. Many unsecured personal loans allow overpayments freely, but some products cap the amount that can be overpaid in a given period without penalty. Credit cards and overdrafts typically have no overpayment restrictions. Our guide to whether debt consolidation is right for you covers the alternative of replacing multiple debts with a single lower-rate product.

What the overpayment does not show

The slider models consistent monthly overpayments throughout the remaining term. It does not model one-off lump sum payments, which in many cases save more total interest than the equivalent amount spread across monthly overpayments, because the lump sum reduces the balance immediately and compounds from day one. If you are considering a lump sum overpayment on a secured loan, the secured loan overpayment impact calculator models both scenarios.

Fixed vs variable payments

The single debt model assumes the same payment every month until the balance reaches zero. For personal loans this is usually accurate, because loans typically have a fixed monthly repayment. For credit cards, store cards, and overdrafts, minimum payments are usually calculated as a percentage of the outstanding balance and fall as the balance falls. Entering a fixed higher payment gives a realistic projection for what you plan to pay, but the actual minimum may be lower than modelled.

Interest rate changes

The tool uses the APR you enter throughout the full term. Variable rate products, including most credit cards and overdrafts, can change their interest rate with notice. A rate increase would extend the projected payoff date and increase total interest; a rate decrease would shorten it. For fixed-rate personal loans the APR is contractually fixed and the tool’s projection will be closer to reality, subject to any fees not captured in the APR.

Fees and charges

The calculation uses only the APR and the payment entered. It does not include any late payment fees, annual fees, balance transfer fees, or other charges that may apply to specific products. Some 0% promotional credit card products also work differently to the standard amortisation model, as no interest accrues during the promotional period. For these products, the tool will overestimate interest paid if the promotional period is in force.

Reading the chart

The navy line shows the standard payment trajectory. If the extra payment slider is above zero, a teal dashed line shows the overpayment trajectory. Both lines end at zero, the point at which the debt is projected to clear. Year markers on the x-axis are placed every 12 months. Hovering over the chart shows the remaining balance at any given month for both lines. For multi-debt mode, the chart shows the combined balance across all debts.