Calculate the true annual cost of different types of debt. Compare credit cards, overdrafts, personal loans and mortgages to see which costs most.
Add each of your debts below. The calculator will rank them by annual interest cost and show your total debt burden.
| Rank | Debt Name | Balance | APR | Monthly Payment | Annual Interest | Months to Clear | Total Interest | Cost per £100 |
|---|
| Debt Type | Typical APR Range | FCA Regulated | Notes |
|---|---|---|---|
| Credit Card (standard) | 20–30% | Yes | 0% deals available on balance transfers |
| Store Card | 25–40% | Yes | One of the most expensive forms |
| Arranged Overdraft | 19.9–39.9% EAR | Yes | Standardised since 2020 FCA rules |
| Personal Loan (good credit) | 6–12% | Yes | Fixed term, predictable payments |
| Personal Loan (poor credit) | 15–40%+ | Yes | Rate depends heavily on credit score |
| Car Finance (PCP/HP) | 5–15% | Yes | Often lower due to asset as security |
| Mortgage (residential) | 3.5–6% | Yes | Cheapest form of UK consumer debt |
APR (Annual Percentage Rate) is the total cost of borrowing expressed as a yearly percentage, including interest and any mandatory fees. Representative APR is the rate offered to at least 51% of successful applicants, so your actual rate may be higher.
Unarranged overdrafts (up to 39.9% EAR), store cards (25–40%), and some credit cards (20–35%) are typically the most expensive. Mortgages are the cheapest form of consumer debt (3–7%).
The debt avalanche prioritises paying off the highest APR debt first while making minimum payments on all others. Once the highest-rate debt is cleared, you redirect freed cash to the next highest-rate debt. This method minimises total interest paid and is mathematically optimal.
A minimum payment is the lowest amount you can pay without defaulting. Paying only the minimum dramatically extends your repayment period. A £3,000 balance at 24.9% APR with 2% minimum payments would take over 27 years to clear and cost over £5,000 in interest.
Yes. Paying off debt reduces your credit utilisation ratio, which is a major factor in UK credit scoring. Keeping utilisation below 25–30% is recommended. Paying off a loan or card also demonstrates reliable payment behaviour.
Debt consolidation can reduce monthly payments and total interest if you secure a lower APR. However, extending the repayment period can mean paying more in total. Use this calculator to compare the true cost before and after consolidation. Watch out for early repayment charges on existing debts.
On a £3,000 credit card balance at 24.9% APR with 2% minimum payments: total interest is approximately £4,000–£5,000 and it takes 27+ years to clear. Increasing payments to a fixed £100/month brings payoff time to around 4 years with £800–£1,000 interest.
Missing a payment triggers a late payment fee (£12–£25) and a missed payment mark on your credit file for 6 years. Multiple missed payments can lead to a default notice or CCJ. Contact your lender immediately — they are required under FCA rules to offer forbearance options.
Key strategies: (1) Avalanche method — pay highest APR debts first; (2) Balance transfers to 0% deals; (3) Consolidation loan at lower APR; (4) Negotiate with creditors; (5) Seek free debt advice from StepChange, Citizens Advice or National Debtline.
Use the amortisation formula: Monthly payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal, r is the monthly rate (APR/12/100), and n is the number of months. For example, a £5,000 loan at 9.9% APR over 36 months = £160.29/month.
EAR (Effective Annual Rate) is the actual annual interest rate for overdrafts, accounting for compounding. APR includes fees as well as interest. Since 2020, most major banks charge 19.9–39.9% EAR for arranged overdrafts — often more expensive than personal loans.
The FCA Consumer Duty (effective July 2023) requires lenders to ensure products deliver good outcomes for consumers. Under the duty, lenders must proactively contact customers in persistent debt with help options and must make products easily comparable.