Debt Snowball Method: Repayment Estimates and Limitations

Keep a clear record of your debts, income and essential costs. Free independent debt advice can help you compare the options available where you live.

In this article, we’ll show you:

• The basics of using a Snowball Debt Calculator in the UK.
• How the snowball debt method can help you pay off your debts, starting from the smallest.
• How to decide if the snowball or avalanche method is best for you.
• Answers to common questions about the snowball debt method.
• How to find help if your debt feels too much to handle.

We understand that having many debts can be worrying. It can feel like a big, cold snowball getting bigger and bigger.

First check whether your repayments are affordable. A repayment-order strategy cannot fix a budget that does not cover essential costs and priority debts.

Using a debt snowball calculator

A quick search online will bring up all sorts of different snowball debt calculators that you might be able to use.

Many of these online debt calculators are purely directed towards North American users.

Choose a calculator that lets you enter the correct currency, rates and payment terms. No generic calculator can determine every legal protection, fee or priority affecting your debts.

Check the inputs and assumptions before relying on a result. Treat any output as an estimate and compare it with current lender statements.

Basics of a snowball debt calculator

What is this snowball debt, you might be asking. And to add to that, what is a snowball debt calculator?

The snowball debt method is a way of paying off your debts methodically if you have multiple debts to settle.

A calculator can estimate repayment time under its assumptions. It cannot promise when a debt will be cleared or replace advice about an unaffordable budget.

The snowball debt method

The snowball debt method is a debt reduction strategy where you pay off your debt from the smallest debt all the way up to the largest debt. 

Cover essentials and priority commitments first, keep the required payments on other accounts, and use only an affordable surplus to overpay the smallest non-priority debt.

It’s a great way of gaining momentum as you make your way through each debt, as when the smallest debt is paid in full, you roll that money you were using to pay off that debt onto the next smallest debt.

Just like a snowball, rolling it in the snow to make it bigger and bigger.

Here’s how to use the debt snowball method to tackle your debt:

1. List your debts from smallest to largest.
2. Use affordable surplus for the smallest non-priority debt while maintaining the other required payments. Do not divert money needed for priority arrears or essential household costs.
3. Repeat this method as you weed your way through the rest of your debt. Make an effort to pay off more each time, as this will allow you to eliminate that debt faster and save more for your next payment.

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Speaking of saving, you might be thinking: doesn’t paying off the debt with the highest interest rate first help me save more?

Sure, that method (known as debt avalanche) might help you save in the long-run – mathematically speaking.

Some people find small cleared balances motivating, while others prefer to minimise interest. There is no evidence here for a universal 80/20 behaviour formula.

It’s vital you pay your debts in a way that keeps you motivated until you’ve eliminated them all.

Motivation differs between people. The largest balance is not necessarily the debt with the highest interest rate, and neither determines priority-debt treatment.

Nobody wants that!

The main idea of a debt snowball is to give you the momentum and motivation to knock out other debts based on the quick wins you get in the beginning.

The snowball method is not guaranteed to be fastest or cheapest. With the same payments and no special charges, targeting the highest interest rate generally reduces interest cost.

Final Word

So now we know what the snowball debt method is. But what is the Snowball Debt Calculator UK?

Basically, a snowball debt calculator allows you to type in all the information about your debts.

The result estimates time and interest under the entered assumptions. Changing rates, fees, new spending, arrears or varying payments can make the actual outcome different.

It takes into account the size of your debts, their interest rates, and the amount you can afford to pay each month, helping you to figure out a strategy for paying off your debts based on the snowball method.

A suggested repayment order is not a legal priority ranking. Deal with priority debts and seek advice if minimum payments are unaffordable.