UK Debt Avalanche Calculator (Highest Interest First)
Pay off your most expensive UK debts first and minimise total interest paid
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Enter your debts, APRs, and monthly payment amount. The calculator pays the highest APR first.
Debts
Debt Avalanche: Pay Highest Interest First
The debt avalanche method targets your highest APR debt first while making minimum payments on the rest. Once cleared, the freed-up payment rolls into the next highest-rate debt. It is mathematically the most efficient approach — minimising total interest paid across all your debts.
In the UK, typical high-interest debts include credit cards (15 to 30% APR), overdrafts (up to 40% APR on some accounts), and car finance PCP agreements (often 8 to 15% APR). These should be cleared before focusing on lower-rate debt.
Should I Overpay My UK Student Loan?
For most UK graduates, voluntarily overpaying a student loan is not recommended. UK student loans (Plan 1, 2, 4, 5, and Postgraduate) are income-contingent and written off after 25 to 40 years regardless of balance. Overpaying reduces a debt that would likely be cancelled anyway. Direct that money into a Stocks and Shares ISA or towards higher-interest consumer debt instead.
Frequently Asked Questions
What is the debt avalanche method?
The debt avalanche pays off your highest APR debt first while making minimum payments on the rest. Once cleared, that payment rolls to the next highest-rate debt. It minimises total interest paid and is the fastest way to become debt-free mathematically.
Should I include my student loan in the avalanche?
For most UK graduates, no. Student loan repayments are automatic via PAYE and the debt is written off after 25 to 40 years. Voluntary overpayments are rarely worth it. Focus on consumer debt with high APRs instead.
What UK debts have the highest interest rates?
Credit cards (15 to 30% APR), arranged and unarranged overdrafts (up to 40% on some accounts), payday loans, and store cards typically carry the highest rates. Car finance (PCP or HP) varies widely.
Should I clear debt or invest in an ISA first?
If your debt APR is above your expected investment return (typically 6 to 8% for a global index fund over the long term), clear the debt first. Below that rate, investing in a tax-free Stocks and Shares ISA may generate more long-term wealth.
This calculator is for illustrative purposes only and does not constitute financial advice. For advice specific to your circumstances, including student loan repayment, consult a qualified financial adviser.
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