If you have multiple debts — credit cards, personal loans, overdraft, buy-now-pay-later — a debt repayment schedule turns an overwhelming situation into a clear, manageable plan. This guide explains how to calculate your debt-free date and compare the avalanche and snowball methods.
For more on managing debt and understanding your options, see the Credit and Debt Hub.
The two main debt repayment methods
| Method | Order of repayment | Best for |
|---|---|---|
| Avalanche | Highest interest rate first | Minimising total interest paid |
| Snowball | Smallest balance first | Staying motivated with quick wins |
Both methods use the roll-up principle: once one debt is cleared, the monthly payment previously sent to that debt is redirected to the next one. This accelerates repayment progressively.
How to build your debt repayment schedule
Step 1: List all your debts
| Debt | Balance | APR | Minimum payment |
|---|---|---|---|
| Credit card A | £3,200 | 29.9% | £64 |
| Credit card B | £1,500 | 22.9% | £30 |
| Personal loan | £8,000 | 8.9% | £165 |
| Overdraft | £500 | 39.9% | n/a |
Total debt: £13,200 | Total minimums: £259/month
Step 2: Determine available monthly payment
Budget analysis: total monthly payment available = £500/month (£241 above minimums).
Step 3a: Avalanche order
Ranked by APR (highest first):
- Overdraft: 39.9% APR
- Credit card A: 29.9% APR
- Credit card B: 22.9% APR
- Personal loan: 8.9% APR
Month-by-month plan (avalanche):
| Month | Focus debt | Extra payment | Balance falling |
|---|---|---|---|
| 1–2 | Overdraft (£500) | £241 | Cleared in ~2 months |
| 3–20 | Credit card A (£3,200) | £241 + £500 freed = £741 extra | Cleared in ~18 months |
| 21–26 | Credit card B (£1,500) | £741 + £64 freed = £805 extra | Cleared in ~5 months |
| 27–48 | Personal loan (£8,000) | £805 + £30 freed = £835 extra | Cleared in ~22 months |
Estimated debt-free date: ~48 months (4 years) Estimated total interest paid: ~£4,200
Step 3b: Snowball order
Ranked by balance (smallest first):
- Overdraft: £500
- Credit card B: £1,500
- Credit card A: £3,200
- Personal loan: £8,000
Results (snowball, same £500/month total):
Estimated debt-free date: ~50 months (4 years 2 months) Estimated total interest paid: ~£4,800
Difference: Snowball costs approximately £600 more in interest and takes 2 months longer. The benefit is clearing two small debts in the first 6 months (psychological wins).
The monthly interest calculation
To estimate interest accruing on a balance each month:
Monthly interest = Balance × (APR ÷ 100 ÷ 12)
| Balance | APR | Monthly interest |
|---|---|---|
| £3,200 | 29.9% | £79.73 |
| £1,500 | 22.9% | £28.63 |
| £8,000 | 8.9% | £59.33 |
| £500 | 39.9% | £16.63 |
This shows that minimum payments on the credit cards barely cover interest — the ‘minimum payment trap’.
The minimum payment trap
On a £3,200 credit card at 29.9% APR, the minimum payment of £64/month covers only the interest (£79.73) — meaning the balance is actually growing, not falling. You need to pay at least above the monthly interest for the balance to reduce.
Rule of thumb: your payment must exceed (balance × APR ÷ 1200) to make any progress at all.
0% balance transfer: the debt avalanche supercharger
If you are eligible for a 0% balance transfer credit card, this is often the most powerful move before starting the avalanche:
- Transfer highest-rate balances to 0% card (typically 12–30 months)
- Pay off the transferred balance in full before the 0% period ends
- Every payment reduces the balance rather than servicing interest
Eligibility factors for 0% transfer cards:
- Credit score (fair to excellent typically required)
- Existing debt level
- No history of defaults or CCJs in the past 6 years
Transfer fees are typically 2–3% of the balance transferred. Even so, this is almost always worthwhile compared to 29.9% APR.
When to get free debt advice
If your minimum payments exceed 50% of your disposable income, or if you cannot meet minimums, professional debt advice is the right next step. Free services in the UK:
- StepChange — stepchange.org (debt management plans, IVAs)
- National Debtline — nationaldebtline.org
- Citizens Advice — citizensadvice.org.uk
- Money Helper — moneyhelper.org.uk
These services are free, impartial, and confidential. They can negotiate with creditors, arrange debt management plans, or advise on formal solutions (IVAs, bankruptcy).