Debt Payoff Calculator Australia 2025‑26
About to start a new job, or just want to know what you actually take home.
Plan your path to debt freedom. Compare snowball vs avalanche strategies for up to 6 debts. See months to payoff, total interest, individual debt timelines. All calculations in your browser.
Compare avalanche (highest rate first) vs snowball (lowest balance first) strategies.
Select the question that matches where you are right now.
Use this calculator to plan and model your financial situation.
Compare scenarios by adjusting inputs. Use the precision bar to reveal more detail. Results update in real time as you type.
Not professional financial advice, not a guarantee of any specific outcome, and not a substitute for qualified advice for significant decisions.
All calculations run entirely in your browser using standard formulas. No data is sent to any server.
The inputs that most influence this result are shown in the breakdown above. Even small changes to key variables can have a significant compound effect over time.
Longer periods amplify both growth and cost. Starting one year earlier or later can change a financial outcome by more than you expect.
Even a 1% change in rate can materially change the outcome over a long period. Use Standard or Advanced mode to model rate sensitivity.
Most financial variables have a non-linear relationship with the result — they compound. The sensitivity table in Advanced mode shows this clearly.
To improve this result, focus on the inputs with the highest leverage. Small changes to the right variable often produce much larger outcomes than large changes to less important ones.
Adjust inputs one at a time. The one that moves the result most is your binding constraint — focus effort there first.
Use the Scenario A/B feature in Advanced mode to compare two situations side by side.
Many financial decisions benefit from timing. Starting earlier, fixing a rate at the right moment, or clearing a debt before applying for new credit can each produce significant improvements.
Depending on what you are planning, these are the natural next steps after reviewing this result.
This calculator shows one part of a financial decision. The related calculators below help you model adjacent factors.
Switch to Standard or Advanced mode and use the scenario comparison tool to model best, expected, and worst case.
For decisions involving significant amounts of money, use this result as a starting point for a conversation with a qualified financial advisor.
How the Debt Payoff Calculator works — avalanche vs snowball
Two debt payoff strategies
The Debt Payoff Calculator compares two approaches: the Avalanche method (pay highest interest rate first) and the Snowball method (pay smallest balance first). Both require you to pay minimum payments on all debts except the one you are targeting.
How extra payments work
When you designate an extra monthly payment above all minimums, that full amount is directed at your target debt. Once that debt is cleared, the freed-up minimum payment + extra payment rolls to the next target — accelerating payoff without increasing your total monthly outlay.
| Debt | Balance | Rate | Min payment |
|---|---|---|---|
| Credit card A | $4,000 | 20% | $80 |
| Car loan | $12,000 | 9% | $280 |
| Personal loan | $6,000 | 14% | $150 |
| Total | $22,000 | — | $510 |
Avalanche method — pay highest interest rate first
How avalanche works
Order your debts from highest to lowest interest rate. Pay minimum on all debts. Direct all extra money at the highest-rate debt. When it is cleared, roll its payment to the next highest rate.
Why avalanche saves the most money
High-interest debts compound the fastest. Clearing them first stops the most expensive interest from accumulating. On a typical multi-debt profile ($22,000 across three debts), avalanche vs snowball can save $800–$2,000 in total interest.
| Target order | Debt | Rate | Strategy |
|---|---|---|---|
| 1st | Credit card A | 20% | Avalanche target |
| 2nd | Personal loan | 14% | Next after card cleared |
| 3rd | Car loan | 9% | Last — lowest rate |
Snowball method — pay smallest balance first
How snowball works
Order your debts from smallest to largest balance. Pay minimum on all debts. Direct all extra money at the smallest balance first. When cleared, roll that payment to the next smallest.
The psychology of snowball
Snowball produces faster visible wins — clearing a $1,500 personal loan in 3 months feels more motivating than slowly reducing a $12,000 car loan. Research in behavioural finance shows that people who use the snowball method are more likely to stick with their payoff plan and ultimately clear all debts, even though avalanche is mathematically superior.
When to choose snowball
Choose snowball if: you have multiple small debts that feel overwhelming, you have a history of giving up on debt payoff plans, or the interest rate differences between your debts are small (under 3–4%).
Avalanche vs snowball — which is right for you?
| Factor | Avalanche | Snowball |
|---|---|---|
| Best for | Mathematical minimisers | Motivation-driven payoff |
| Total interest paid | Lowest | Slightly higher |
| Time to first payoff | Longer (highest rate first) | Faster (smallest balance) |
| Psychological benefit | Lower | Higher |
| Completion rate | Slightly lower | Slightly higher |
| Rate difference matters? | Yes — works best >5% spread | Less important |
The hybrid approach
Many financial advisers recommend a hybrid: use snowball for debts with balances under $2,000 (quick wins) and avalanche for larger debts. This captures the motivation benefit while minimising interest on the big-ticket items.
Debt consolidation — when it helps and when it does not
What is debt consolidation?
Debt consolidation combines multiple debts into a single loan at a lower interest rate. A personal loan at 10% replacing credit cards at 20% saves significant interest. The lower monthly payment frees up cash — but only if that cash goes toward accelerating the payoff, not new spending.
When consolidation makes sense
Consolidation works when: the consolidated rate is materially lower than your current average rate, you have a consistent income to service the new loan, and you close or freeze the cards you are consolidating. Check exit fees on existing loans before consolidating.
The debt consolidation trap
Consolidating credit cards and then using them again creates double the debt. If you consolidate $15,000 in cards into a personal loan and then run the cards back up, you have $30,000 in debt. If consolidating, close or severely limit the cards you pay off.
❓ Frequently asked Frequently asked questions
What is the fastest way to pay off multiple debts?
The mathematically fastest method is avalanche (highest interest rate first), which minimises total interest. The psychologically fastest method is snowball (smallest balance first), which keeps motivation high. Both are significantly faster than paying minimums only — the critical factor is committing to a fixed extra payment every month.
How do I calculate which debt to pay first?
For avalanche: sort by interest rate (highest first). For snowball: sort by balance (smallest first). In both cases, pay minimum payments on all debts and direct all extra money at the top-priority debt. When it is cleared, roll its payment to the next debt.
Does consolidating debt hurt my credit score?
Applying for a consolidation loan creates a credit enquiry (small short-term score reduction). If successful, the new loan appears on your file. Closing multiple old accounts may reduce your average credit age. However, paying down balances improves utilisation — the overall impact depends on your specific credit profile.
Should I use my savings to pay off debt?
Compare the after-tax return on savings vs the interest rate on your debt. If your credit card charges 20% and your savings earn 5%, paying off the card with savings produces a guaranteed 20% return (the interest you avoid). Generally: pay off any debt above ~6–7% interest before prioritising investments.
How does existing debt affect my home loan capacity?
Every $100/month in existing debt repayments reduces your maximum home loan borrowing capacity by approximately $12,000–$15,000. A $500/month car loan can reduce your maximum mortgage by $60,000–$75,000. Clearing debts before applying for a home loan is one of the most effective ways to increase your borrowing power.
Where these figures come from
Debt and credit figures on this page come from the Reserve Bank of Australia (consumer and housing rate data), ASIC MoneySmart (consumer guidance under the National Consumer Credit Protection Act), and the Australian Financial Complaints Authority (dispute resolution).
- Consumer credit interest rates — RBA — Indicator Lending Rates (F5).
- Credit card & personal loan guidance — ASIC MoneySmart — Managing debt.
- Financial hardship & dispute resolution — Australian Financial Complaints Authority (AFCA).
- HECS/HELP repayment thresholds — ATO — Study and training support loans.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.