See how quickly you can become debt-free by paying off up to three debts using the avalanche method (highest interest rate first).
This calculator helps you plan a strategy to pay off up to three debts simultaneously, using the avalanche method — directing any extra monthly payment toward the debt with the highest interest rate first, then rolling that payment into the next highest-rate debt once it is cleared. It shows how long it takes to become debt-free, the total interest paid, and the year-by-year balance reduction for each debt.
Each month, the calculator charges interest on each debt's current balance, applies the minimum payment to each debt, and then directs the extra payment to the highest-rate debt (the avalanche approach). When a debt reaches zero, its minimum payment is "rolled" — added to the extra payment allocated to the next highest-rate debt — accelerating payoff of the remaining debts.
Example: Debt 1: A$5,000 at 20% (min A$150). Debt 2: A$8,000 at 12% (min A$200). Extra: A$100/month. Under the avalanche method, the extra A$100 plus Debt 1's minimum of A$150 — total A$250/month — goes to Debt 1 first (highest rate at 20%), while Debt 2 receives only its A$200 minimum. Once Debt 1 is cleared, the full A$350/month (A$250 + A$100 released from Debt 1, plus Debt 2's A$200 minimum) attacks Debt 2. This method minimises total interest paid across all debts by eliminating the highest-rate balance first. (Note: exact payoff times depend on your specific inputs — enter your own numbers above.)
Many Australians carry multiple debts simultaneously — a credit card balance, a personal loan, a car loan, and potentially HECS-HELP student debt. The two most widely discussed repayment strategies are the avalanche (highest interest rate first, as modelled here) and the snowball (smallest balance first, for psychological quick wins). Mathematically, the avalanche method minimises total interest paid over the payoff period and is the approach modelled by this calculator. The snowball method may result in slightly more total interest paid, but the motivation of clearing a full debt sooner can help some people stay committed to the plan — there is no single right answer, and the best strategy is the one you will actually stick to. A key Australian consideration is HECS-HELP debt: voluntary repayments on HECS-HELP balances do not earn interest (the debt is only indexed annually to CPI), and there is no interest rate as such — the "interest" is effectively the CPI indexation. For most Australians, HECS-HELP is a lower priority for extra repayments than high-rate consumer debt, but if CPI is running high, this may change the calculus. If your debts are overwhelming, the National Debt Helpline (1800 007 007) provides free financial counselling from qualified professionals throughout Australia — counsellors can help assess your options, including hardship provisions, debt agreements, and insolvency if necessary.
The avalanche method directs all extra repayment capacity to the debt with the highest interest rate, while maintaining minimum payments on all others. Once the highest-rate debt is cleared, the amount that was going to it (minimum plus extra) is redirected to the next highest-rate debt. This method minimises total interest paid across all debts, making it mathematically optimal. The tradeoff is that the highest-rate debt is not always the smallest balance, so it may take longer to clear the first debt compared to the snowball method.
The snowball method directs extra repayments to the smallest balance first, regardless of interest rate — providing the psychological reward of clearing a debt sooner. Once the smallest debt is paid off, the freed payment is rolled into the next smallest. While this method can take longer and cost more in total interest than the avalanche method, research suggests that the motivational benefit of quick wins can help people stay committed to debt repayment. Choose the method that you are more likely to stick with.
Generally not. HECS-HELP is indexed to CPI annually (not charged interest like a consumer loan), and compulsory repayments are automatically collected through the tax system based on your income. There is no standard "minimum payment" you control. Voluntary repayments reduce the indexed balance, but for most Australians, paying down high-rate consumer debt (credit cards, personal loans) first is a better use of extra cash. If CPI indexation is running high, the case for voluntary HECS repayments strengthens — but this calculator models interest-bearing debts only.
In the avalanche (and snowball) strategy, when a debt is cleared, the minimum payment that was going to it is "rolled over" — added to the total amount allocated to the next debt in the sequence. This is the "snowball" or "roll-over" effect, and it is what makes the strategy accelerate over time as more debts are cleared. This calculator models this roll-over automatically.
As a general rule, if the guaranteed return from paying off debt (i.e., the interest rate on the debt) exceeds the expected after-tax return from investing, pay off the debt first. For high-rate consumer debt (credit cards at 15-25%, personal loans at 10-15%), this is almost always the case. For a home loan at 5-7%, the answer is less clear and depends on your investment returns and risk tolerance. Superannuation contributions (especially employer-matched or concessional contributions) may be an exception even for high-rate debt, due to the significant tax benefit.
If you are struggling to meet minimum payments, contact your creditors as early as possible — most Australian banks and lenders have hardship provisions and can offer payment deferrals, reduced payments, or restructuring options under the National Consumer Credit Protection Act. You can also call the National Debt Helpline (1800 007 007) for free, confidential financial counselling from a qualified professional, or contact your bank's hardship team directly.
Disclaimer: The information and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. This calculator models the avalanche debt repayment strategy and assumes fixed interest rates, no new debt is added, and minimum payments and extra payments are made consistently each month. Actual payoff timelines and interest costs depend on your specific debt terms and payment behaviour. If you are experiencing financial hardship, contact the National Debt Helpline on 1800 007 007 for free financial counselling.