What is the debt snowball method?
The snowball method pays minimums on everything, then puts all extra money toward the smallest balance first. When that debt is gone, its payment "snowballs" into the next smallest. It is rarely the mathematically cheapest route, but the quick early wins are powerful motivation — and studies of real borrowers show people who feel progress are more likely to stick with a payoff plan.
What is the debt avalanche method?
The avalanche method targets the highest interest rate first while paying minimums on the rest. This minimizes total interest paid and is the mathematically optimal strategy. The trade-off: if your highest-rate debt also has a large balance, the first payoff milestone can take a long time to reach.
Which strategy should I choose?
If you are motivated by numbers, choose avalanche — it always costs the least in interest. If you have struggled to stick with payoff plans before, choose snowball — the momentum of clearing debts quickly matters more than the interest difference, which this calculator shows you explicitly. Often the difference is smaller than people expect; the best strategy is the one you will actually follow.
Why does my minimum payment need to cover the monthly interest?
If a payment is smaller than the interest the balance generates each month, the debt grows even while you pay — negative amortization. The calculator flags this because no payoff date exists under those terms. The fix is increasing the payment, negotiating a lower rate, or consolidating at better terms.
Should I keep saving while I clear the debt?
Usually yes, at least a small buffer, even though the arithmetic argues for putting every spare pound against the balance. Someone repaying aggressively with no cash reserve meets the next car repair or vet bill with a credit card, which undoes months of progress and is demoralising enough that plans are often abandoned at that point. A modest starter fund of around a month of essentials, built first and then held, is what keeps the repayment plan intact. The full emergency fund can wait until the expensive debt is gone.
Should I close a credit card once I have paid it off?
Often not, at least not immediately. Closing removes that card's limit from your total available credit, which raises your utilisation ratio on the remaining balances and can lower your score — and if it is an old account, it may eventually reduce the average age of your credit history too. The case for closing is behavioural rather than numerical: if leaving the card open means it will be used again, the score is the lesser concern. Cutting up the card while keeping the account open is a common compromise.