Which debt should I pay off first?

While every item is running and none is overdue, extra money goes to the item with the highest annual percentage rate. That produces the least interest across the whole repayment. If something is overdue or a fee is coming, that item goes first, because fees land in one step rather than accruing over time.

Snowball or avalanche, which one is better?

Avalanche pays the highest rate first and is the cheaper order on arithmetic. Snowball pays the smallest balance first and gets you a cleared item sooner. Either one works only if the payment freed by a cleared item goes to the next item instead of back into everyday spending.

How do I get out of debt without earning more?

Two things set the end date: the size of the payment and the rate it works against. Without more income what remains is refinancing a high-rate item onto a cheaper one, and passing every freed payment on to the next item. If the minimum payments together already exceed your budget, free debt counselling is the right address and not an app.

Why is my loan balance not going down even though I pay every month?

Each payment settles the interest accrued on the balance first, and only the remainder reduces the balance. If the payment does not cover the monthly interest, nothing is left to reduce it and the balance rises despite the payment. This is common on credit cards paid at the minimum and on an overdraft in permanent use. Once the payment sits above the monthly interest, the balance falls again.

Is an extra payment worth more at the start or at the end of a loan?

At the start. Interest runs on the balance, so an early extra payment takes the interest for every month that follows with it, while a late one saves only the interest of the remaining weeks. On German consumer credit you may repay in part or in full at any time under section 500(2) BGB, except on a mortgage with a fixed rate while the rate is fixed.

Should I save first or pay off debt first?

A small buffer in a separate account stops the next car repair from landing on the overdraft, so it belongs to the payoff. Once the buffer exists, the comparison of rates decides: while your debt costs more interest than a savings account earns, paying down wins. On overdraft and credit card rates that comparison is not close.

Paying off consumer debt: which one goes first

The order decides how much clearing your debt costs. It can only be set once every item sits on one list.

By Deniz Erginos. Updated 11/10/2026

Clearing debt begins as a counting job. While the amounts sit in separate apps, in contract folders and on a bank statement, the total exists nowhere, and without a total there is no end date to work out. A full list costs one evening. After that you know what is outstanding, what leaves the account every month before anything else, and which item is the dearest. Only with those figures does the question of order have an answer rather than a guess.

Every item on one list

Write down every running loan: a personal loan, car finance, the refinancing you once used to tidy up the others.
Add the items that do not feel like loans: overdraft, a credit card on minimum payments, instalment plans at Klarna or PayPal, a phone contract with the handset financed into it.
Add the ones with no interest at all: unpaid invoices, money reclaimed by a public authority, money borrowed from family. No interest still means an obligation with a date on it.
Against each item put three figures: balance, monthly payment and annual percentage rate. The rate is in the contract documents rather than in the app overview.
Mark anything overdue, and anything where a fee or a collection agency has been announced. That mark overrides the interest order later on.
Add up the monthly payments. That sum is what leaves your account every month before you decide anything at all.

12 CFR § 1026.18, Legal Information InstituteRegulation Z on what a US lender has to disclose for an instalment loan such as a personal loan or car finance. Paragraph (e) requires the annual percentage rate, paragraph (g) the number, amounts and timing of the payments.

What a monthly payment is made of

A payment is not one transaction, it is split on arrival. The interest that accrued on the balance over the past month is settled first. Whatever is left after that reduces the balance. Only the second part moves you towards the end, the first pays for the time you had the money. So the size of a payment on its own says little about how fast an item disappears. Two loans with identical payments can run for very different lengths of time if their rates are far apart.

Because interest runs on the balance, the split shifts over the term. Early on the balance is high, the interest share is large and the principal share is small. Every month the balance drops, the interest charged on it drops with it, and more of the same payment is left to reduce the balance. Near the end of a term a payment is almost all principal. That is where the timing effect comes from: an extra dollar paid early takes the interest for every month that follows with it, while the same dollar paid at the end saves only the interest of the last few weeks. How large the gap is on your own figures belongs in the app. This section only says why there is one.

Avalanche or snowball

Avalanche (highest rate first): Every item keeps running on its minimum payment, and the extra money goes to the item with the highest annual percentage rate. This is the order that produces the least interest overall.
Snowball (smallest balance first): Every item keeps running on its minimum payment, and the extra money goes to the smallest balance. The first item is cleared sooner and the list gets shorter faster.

The two methods differ only in what they sort by, so they optimise different things. The avalanche sorts by rate and minimises the interest paid. The snowball sorts by balance and minimises the time to the first cleared item. On arithmetic the avalanche is the cheaper order, because interest runs on the balance and a high rate costs more than a low one. In practice the snowball keeps some plans alive, because something is visibly finished after a few months. Both orders arrive at the same place if you stay with them. Which one fits you is something you know better than any table does. Where both sortings name the same item first, the question does not arise.

When the payment does not cover the interest

There is one case in which no order helps. If the monthly payment does not cover the interest that accrues on the balance in the same month, nothing is left to reduce the balance. The balance then does not fall, it rises. No payoff date exists in that situation, and any projection that prints one anyway has rounded something off or left something out. It shows up most often on credit cards paid at the minimum and on an overdraft in permanent use, because the minimum payment there is tied to a percentage of the balance while the rate sits high. An honest projection has to report this state as the outcome instead of dressing it up as a date. What resolves it is rarely a large sum: as soon as the payment sits above the monthly interest, the balance starts to fall, and from then on there is a date again. How much is missing depends on the balance and the rate.

Where the extra money comes from

Every order assumes something is available beyond the minimum payments. The strongest source appears on its own the moment the first item is cleared, because its payment is freed. Letting it flow back into everyday spending is the obvious reaction and it costs the most time. Put it on the next item instead and the amount you are paying down with grows with every item you finish, while the total keeps falling. That is the effect the snowball is named after, and it works the same way in avalanche order. It is the one increase you do not have to find savings for, because the money already sits in the monthly plan.

The freed payment from a cleared item goes to the next item in full, on the same day it used to leave the account.
A fixed amount at the start of the month works better than whatever is left at the end. What is left at the end is a different figure every month and often nothing.
One-off money such as a tax refund goes to whichever item sits at the top of your chosen order.
Check the older agreements for two things: whether paying ahead of schedule carries a charge, and whether the lender puts a surplus on the principal or simply treats your next payment as already made. Only the first of those shortens the loan.
On German consumer credit the right to repay early at any time, in part or in full, is statutory rather than contractual, except on a mortgage with a fixed rate while the rate is fixed. On an ordinary consumer loan the compensation a bank may charge for it is capped (section 500(2) and section 502(3) BGB).

Paying a loan off early, Consumer Financial Protection BureauThe regulator on prepayment penalties for auto loans. Whether one applies is decided by your contract and state law, and the places to check are the prepayment clause and the Truth in Lending disclosure.

§ 500 BGB, Gesetze im InternetThe official German wording on termination and early repayment. Paragraph 2 sentence 1 carries the right to repay early, sentence 2 the restriction for a residential mortgage loan with a fixed borrowing rate.

§ 502 BGB, Gesetze im InternetThe official German wording on compensation for early repayment. The ceilings of 1 percent and 0.5 percent are in paragraph 3 point 1, the second cap at the borrowing interest up to the agreed repayment date in paragraph 3 point 2.

When arithmetic stops helping

The app answers how long it takes. It does not answer what to do when the minimum payments together come to more than what is left after rent and living costs. At that point the subject is deferral, adjusted instalments, a settlement with the creditors or a consumer insolvency procedure, and those are negotiations rather than sums. Recognised counselling centres handle them free of charge and are bound by confidentiality. An appointment there commits you to nothing and gets you someone who talks to the creditors.

Find a counselling centre, BAG-SBThe German federal association for debt counselling keeps the directory of recognised centres, searchable by postcode. Advice there costs nothing.

Getting help with debt, Consumer Financial Protection BureauWhere to find a non-profit credit counsellor in the United States, what a first session covers, and how to tell a genuine service from one that charges for the introduction. It does the part no app can.

The app

In the app the list is not a piece of paper: every item is a sheet with its balance, its payment and its own date, and the one that runs longest sets your countdown. Extra payments show days won and interest saved at once. Everything stays on the phone.

Get it on the App Store Get it on Google Play

Common questions

Which debt should I pay off first?: While every item is running and none is overdue, extra money goes to the item with the highest annual percentage rate. That produces the least interest across the whole repayment. If something is overdue or a fee is coming, that item goes first, because fees land in one step rather than accruing over time.
Snowball or avalanche, which one is better?: Avalanche pays the highest rate first and is the cheaper order on arithmetic. Snowball pays the smallest balance first and gets you a cleared item sooner. Either one works only if the payment freed by a cleared item goes to the next item instead of back into everyday spending.
How do I get out of debt without earning more?: Two things set the end date: the size of the payment and the rate it works against. Without more income what remains is refinancing a high-rate item onto a cheaper one, and passing every freed payment on to the next item. If the minimum payments together already exceed your budget, free debt counselling is the right address and not an app.
Why is my loan balance not going down even though I pay every month?: Each payment settles the interest accrued on the balance first, and only the remainder reduces the balance. If the payment does not cover the monthly interest, nothing is left to reduce it and the balance rises despite the payment. This is common on credit cards paid at the minimum and on an overdraft in permanent use. Once the payment sits above the monthly interest, the balance falls again.
Is an extra payment worth more at the start or at the end of a loan?: At the start. Interest runs on the balance, so an early extra payment takes the interest for every month that follows with it, while a late one saves only the interest of the remaining weeks. On German consumer credit you may repay in part or in full at any time under section 500(2) BGB, except on a mortgage with a fixed rate while the rate is fixed.
Should I save first or pay off debt first?: A small buffer in a separate account stops the next car repair from landing on the overdraft, so it belongs to the payoff. Once the buffer exists, the comparison of rates decides: while your debt costs more interest than a savings account earns, paying down wins. On overdraft and credit card rates that comparison is not close.