Debt payoff calculator: snowball vs avalanche

Snowball vs avalanche in plain English

Both methods work the same way: you pay the minimum on everything, then throw every spare pound or dollar at one "target" debt. When that target is gone, its payment rolls onto the next one, so your attack gets bigger each time a debt disappears. The only difference is the order:

• Debt snowball: target the smallest balance first. You get quick wins, which keeps a lot of people going.
• Debt avalanche: target the highest interest rate first. Mathematically it always costs the same or less in interest.

Worked example with four debts

The default numbers above are a fairly typical mix: a $7,800 credit card at 26.9%, a $3,100 car loan at 6.9%, a $5,500 personal loan at 11.5% and a $900 store card at 29.9%. Minimums add up to $605 a month, and there's $200 extra on top.

• Both plans clear the store card first (month 5), because it's the smallest and the most expensive.
• Snowball then goes after the car loan (gone in month 10), then the personal loan, and leaves the 26.9% card until last. Debt-free in 2 years 4 months, with about $4,640 of interest.
• Avalanche goes straight for the 26.9% card instead. Debt-free a month sooner, with about $3,940 of interest, roughly $700 less.
• Minimums only, with no extra and no rollover, takes nearly 8 years and costs about $12,700 in interest.

That last line is the real headline. Whichever order you pick, a steady extra payment plus the rollover saves around $8,000 here.

Which method should you pick?

If the calculator shows the two plans are within a few dollars of each other, pick the snowball; early wins are worth something. If the avalanche saves a meaningful amount, it's worth the patience, especially if your biggest debt is also your most expensive. Research on real households suggests people who focus on clearing individual accounts are more likely to stick with it, so the "best" plan is the one you'll still be following in month 14. We weigh both sides in Debt snowball vs debt avalanche.

Why the rollover matters more than the method

Compare the "minimums only" row with either plan. Most of the savings come from two habits, not the order: paying a bit extra every month, and keeping your total monthly payment the same as debts are cleared instead of spending the freed-up money. That rollover is what turns a $35 store-card payment into part of a $235 payment aimed at your next debt in month six.

Before you start: three quick checks

• Have a small cushion. Even $500–$1,000 set aside stops a flat tyre from going back on a credit card. See should I pay off debt or save first?
• Check for cheaper rates. A 0% balance transfer or a lower-rate consolidation loan can beat either method, if the fees are reasonable.
• Capture any employer match. In the US, skipping a 401(k) match to pay debt faster usually costs you more than it saves.

Frequently asked questions

What is the difference between the debt snowball and debt avalanche?

The snowball pays off the smallest balance first for quick wins; the avalanche pays off the highest interest rate first to minimise interest. Both pay minimums on everything else and roll freed-up payments into the next debt.

Which saves more money, snowball or avalanche?

The avalanche always costs the same or less in interest because it clears the most expensive debt first. How much it saves depends on your debts; sometimes the difference is tiny.

Should I include my mortgage in the debt payoff plan?

Usually not. Mortgages have low rates and long terms, and they'd dominate the plan. Most people clear consumer debt (cards, personal loans, car loans) first, then decide whether to overpay the mortgage.

What if my minimum payment doesn't cover the interest?

Then that balance grows every month. The calculator flags it. Increase the extra payment, ask the lender for a hardship plan, or look for a lower-rate option.

How does the extra payment get used?

Each month the calculator pays every minimum, then puts the whole extra amount (plus any minimums freed up from debts already paid off) toward the current target debt.