How Our Calculators Work

We believe understanding how numbers are calculated is just as important as the numbers themselves. This page explains the methods behind each tool, in plain English.

Snowball vs Avalanche

When you have multiple debts, there are two popular strategies for deciding which one to pay off first:

• Snowball method: Pay off the smallest balance first, then roll that payment into the next smallest. This gives you quick wins and builds momentum.
• Avalanche method: Pay off the highest interest rate first, then move to the next highest. This saves you the most money in interest overall.

Both methods assume you make minimum payments on all debts and put any extra money toward the priority debt. Our Debt Payoff Calculator compares both strategies side by side so you can see the difference in total interest paid and payoff time.

How interest is calculated

Most UK credit cards and loans charge compound interest, which means interest is calculated on your balance plus any previously accumulated interest. Here is how it works in our calculators:

• We take your annual interest rate and divide it by 12 to get a monthly rate.
• Each month, we apply that rate to your outstanding balance to calculate the interest charged.
• Your payment is then applied: interest is paid first, and the remainder reduces your balance.
• This process repeats month by month until the balance reaches zero.

APR vs EAR

You will often see two types of interest rate quoted:

• APR (Annual Percentage Rate): The headline rate lenders are required to show. For credit cards, this is typically the rate you see advertised.
• EAR (Effective Annual Rate): The actual rate you pay once compounding is factored in. Because interest compounds monthly, the EAR is slightly higher than the APR.

Our calculators ask for the APR (since that is what appears on your statement) and handle the monthly compounding internally.

How minimum payments work

Most UK credit card providers calculate your minimum payment as the higher of a percentage of your balance (typically 1-2.5%) or a fixed amount (usually around five pounds). The catch is that as your balance falls, so does your minimum payment, meaning you pay less each month, which stretches your debt out for years.

Our Minimum Payment Calculator shows exactly how long this takes and how much extra interest you pay , and what happens if you fix a higher payment instead.

Balance transfer calculations

A balance transfer moves your existing card debt to a new card with a lower (often 0%) interest rate for a promotional period. The new card usually charges a one-off transfer fee (typically 1-3% of the balance).

Our Balance Transfer Calculator compares the total cost of staying on your current card vs transferring, factoring in the transfer fee, the 0% period, and the rate that kicks in afterwards.

Try our calculators

• Debt Payoff Calculator – Compare snowball vs avalanche across multiple debts
• Credit Card Payoff – See when you will be debt-free on a single card
• Minimum Payment Calculator – See the real cost of only paying the minimum
• Balance Transfer Calculator – Compare staying vs transferring to a 0% card
• Debt-to-Income Ratio – Check if your debt level is healthy
• Savings Goal Calculator – Plan your emergency fund or savings target
• Loan Consolidation – See if combining debts into one loan saves money
• Budget Planner – Create a simple monthly spending plan
• Debt Freedom Planner – Build a full personalised debt payoff plan