Debt Payoff Calculator: Snowball vs Avalanche

How the calculator works

Every month it adds interest to each debt, pays each minimum, then puts all the money left (your extra amount plus the minimums of debts already paid off) on the target debt. With the snowball the target is the smallest balance; with the avalanche it is the highest interest rate. Your total monthly payment stays the same until everything is paid.

Example: three debts, $300 extra a month

A $2,500 store card at 18% (minimum $75), a $6,000 Visa at 24% (minimum $180) and a $9,000 car loan at 7% (minimum $280), with $300 extra, means $835 a month in total.

• Snowball: the store card is gone in month 8, the Visa in month 19 and the car in month 24. Total interest: about $2,515.
• Avalanche: the Visa goes first in month 15, then the store card in month 19 and the car in month 24. Total interest: about $2,354, saving $161.
• Minimums only: 44 months and about $5,571 of interest. The extra $300 a month saves more than $3,000 and nearly two years.

Tips

• Stop adding new debt while you pay down the old.
• Put windfalls, tax refunds and raises straight onto the target debt.
• Call your card issuers and ask for a lower rate; it speeds up either method.
• Keep a small emergency fund so surprises don't go back on a card.

Frequently asked questions

What is the debt snowball method?

Pay the minimum on every debt and put every extra dollar on the smallest balance. When it is gone, roll its payment onto the next smallest. Quick early wins keep many people motivated.

What is the debt avalanche method?

Same idea, but you target the debt with the highest interest rate first. It always costs the same or less interest than the snowball, and is the mathematically best order.

Which is better, snowball or avalanche?

Avalanche saves the most money; snowball often wins on motivation. If the two give similar results for your debts, pick whichever you will stick with. The biggest win is paying extra at all.

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