Take two debts: a R25,000 store or credit account at 22 percent with an R800 minimum, and a R60,000 personal loan at 11 percent with a R1,500 minimum. You add R2,000 extra each month. On the avalanche method the extra is aimed at the 22 percent account first because it carries the costlier interest. Both minimums are paid every month, and once the 22 percent account clears, its R800 minimum plus the R2,000 extra roll onto the personal loan. The plan clears both debts in 26 months, about 2 years and 2 months, for R11,508 of total interest and R96,508 paid in all. With these two debts the snowball method lands on the same result, because the 22 percent account is also the smaller balance, so both methods attack it first. The two strategies diverge only when the highest-rate debt is not also the smallest, and you can change the balances above to see that.
Step
Amount
Total starting balances
R85,000
Extra payment each month
R2,000
Total interest paid
R11,508
Total repaid
R96,508
Time to debt-free
26 months
How it is calculated
The calculator runs your debts forward one month at a time. Each month it adds interest to every balance at one twelfth of the annual rate, pays each minimum, then throws the whole extra payment at a single target debt. Avalanche orders the targets by interest rate, highest first, which clears debt for the least total interest. Snowball orders them by balance, smallest first, which closes individual accounts sooner. In both methods the freed-up minimum from a cleared debt is added to the pool attacking the next one, which is the rolling or stacking effect that accelerates the back half of the plan. The loop stops when every balance reaches zero and reports the month count, total interest and total paid. If the minimums plus the extra never beat the interest, the balances do not fall and the tool flags that you need to pay more.
Frequently asked questions
Is the snowball or avalanche method better?
The avalanche method targets the highest interest rate first, so it clears debt for the least total interest. The snowball method targets the smallest balance first, which clears individual accounts sooner and can feel more motivating. Both apply your minimum payments plus a rolling extra amount; this tool lets you compare the two.
Are debt repayments tax-deductible in South Africa?
Repayments on personal debt such as credit cards, store accounts, or personal loans are not tax-deductible under SARS rules. Only interest on debt used to produce taxable income may qualify as a deduction under section 24J of the Income Tax Act. Personal consumer debt gives no tax relief, so paying it off quickly saves you the full after-tax cost of the interest.
How does the National Credit Act affect minimum payments?
The National Credit Act requires credit providers to disclose the minimum monthly repayment on every credit agreement. Lenders must set that minimum high enough that the debt is repaid within the agreed term. If you pay only the minimum, interest accumulates and the payoff timeline can stretch considerably. Paying any amount above the minimum reduces the principal faster and cuts the total interest owed.
Can I pay off a personal loan early without a penalty in South Africa?
Under the National Credit Act, consumers have the right to settle any credit agreement early. A credit provider may charge a reasonable settlement fee, but that fee is capped by the Act and is generally small compared with the interest saved. It is worth requesting a settlement quote from your lender before making a lump-sum payment so you know the exact amount needed to close the account.