Highest interest first (the avalanche method)
Each month every debt gets its own payment. Anything extra goes to the debt with the highest APR. When a debt is paid off, the payment you were making on it rolls on to the next highest APR, so the amount you pay in total stays the same and the debts fall faster and faster.
Paying the highest APR first always costs the least interest. The other popular way, the snowball method, clears the smallest balance first: it costs a little more but gives quicker wins. The full planner compares both.
How interest is worked out
Each month's interest is the balance times the APR divided by 12. Card companies and banks usually work interest out daily and may charge fees, so treat the dates and totals as a close guide rather than to the penny.
Compared with paying each debt only its own payment
For comparison, the calculator also works out what happens if each debt only ever gets its own payment: no extra, and nothing passed on when a debt is cleared. The difference is what the avalanche saves you.
What it leaves out
Your payments stay fixed, so it does not follow a card's minimum payment as it falls. It has no 0% deals ending, no balance transfer or late fees, and no new spending. If a payment does not cover the interest, that debt will never clear on its own: you will see a warning.
If debt is getting on top of you
Free, confidential advice is available from StepChange, National Debtline, Citizens Advice and MoneyHelper. Talk to them before borrowing more to pay debts off.
