Debt Snowball vs. Avalanche Calculator

Mathematically, the avalanche method always saves more money because you're eliminating high-interest debt first. However, numerous behavioural finance studies show that many people stick with the snowball method better because quick wins (clearing small debts) provide psychological momentum. The "best" method is the one you'll actually follow through on. If the interest difference is small, choose snowball for the motivation boost.

For credit cards, the minimum payment is typically 2–3% of the balance or $25 (whichever is greater). For personal loans and car loans, it's your fixed repayment amount. For home loans, it's your standard monthly repayment. Pro tip: always pay more than the credit card minimum — paying just the minimum on a $5,000 credit card at 20% p.a. can take over 20 years to clear.

Any amount helps, but the bigger the extra payment, the faster the payoff. A common framework: after building a small emergency fund ($1,000–$2,000), redirect all disposable income to debt. Once debt-free, redirect those payments to savings and investing. Even finding an extra $100–200/month (e.g. cancelling subscriptions, meal prepping instead of takeaway) can cut years off your debt timeline.

Debt consolidation can help if you can secure a significantly lower interest rate — for example, consolidating credit card debt at 20% into a personal loan at 8–12%. In Australia, some lenders offer balance transfer cards with 0% introductory periods (often 12–24 months). However, watch for: balance transfer fees (usually 1–3%), revert rates after the promo period, and the risk of racking up new debt on the emptied card. Consolidation is a tool, not a cure — the snowball/avalanche strategy still applies to the consolidated loan.