Debt out of control — where do I start?

Snowball or avalanche in one minute

• Keep paying every minimum, and put everything extra on one debt at a time. When that debt is gone, its minimum and the extra roll onto the next one — so the amount you throw at the debt never drops.
• Avalanche: the highest interest rate first. It always costs the least interest, because the most expensive money goes first.
• Snowball: the smallest balance first. It usually costs a little more, but you clear a debt sooner — and for many people that early win is what keeps them going.
• Minimums only is the expensive way. If a minimum does not even cover a month’s interest, that balance never comes down — the tool warns you when it sees one.

How we calculate it

• Each month, interest is added at the yearly rate divided by 12, then the payments come off.
• Minimums only: each debt pays its own minimum, at the amount you enter, until it is paid off. Nothing rolls over. Real card minimums often shrink as the balance falls, which makes paying only the minimum even slower.
• Snowball and avalanche: every month you pay all the minimums plus the extra; whatever is left after the minimums goes to the first debt in the order, and a cleared debt’s minimum moves to the next.
• We stop at 50 years. A plan that is not paid off by then is shown as “not within 50 years”.

Where the figures come from

• Interest-rate caps: the National Credit Act limits what lenders may charge — for credit cards and store cards (credit facilities) the repo rate plus 14% a year, for unsecured personal loans the repo rate plus 21%. National Credit Regulator.
• Our example figures, not sourced: the balances, the 20.75%, 24% and 13% rates and the minimums. Use the figures on your own statements.

Left out: monthly service and credit-life fees, new spending on the cards, rate changes over time, interest charged daily rather than monthly, and early-settlement penalties. See also personal loan rates and credit card fees. Calculations, not advice.