Plan how to clear several debts with one monthly budget, and compare the avalanche and snowball methods.
Debt-free in
1 yr 8 mo
Avalanche: RM 2,203.97 total interest
Debt-free in: 1 yr 8 mo
Avalanche pays the highest rate first and costs the least. Snowball clears the smallest balance first, which some people find easier to stick with.
RM12,000 card at 18% + RM5,000 loan at 8%, RM1,000 a month
Avalanche: RM2,204 interest. Snowball: RM2,529.
Debt-free in 20 months (avalanche)
Same debts, snowball
A quicker first win, at a cost of about RM325 more interest.
Loan cleared in month 9
How the figures above are worked out — the rules, rates and reasoning behind every line.
Each month every debt gets its minimum payment, and whatever is left of your budget goes to one target debt. When a debt is cleared, its minimum rolls into the next target, so payoff speeds up.
The avalanche method targets the highest interest rate first and pays the least interest. The snowball method targets the smallest balance first and clears debts sooner, which some people find motivating.
Use the outstanding balance and annual interest rate from each statement. Credit cards are often 15–18% a year.
Your budget must at least cover all the minimums. If interest grows faster than your payments, the calculator will say so.
Avalanche always costs the same or less interest. Snowball can cost more but gives earlier wins. The best plan is the one you will stick to.
AKPK, the agency set up by Bank Negara, offers free counselling and debt management programmes.
MyKira is free thanks to ads, which may be personalised. See our Privacy Policy.