Home / Financial / Debt Payoff Calculator
Debt Payoff Calculator: Avalanche vs Snowball
List up to four debts with their balances, rates and minimum payments, add any extra you can pay each month, and see how long each strategy takes and how much interest it costs.
Two ways to order the debts
Both methods pay the minimum on every debt and send all remaining money to one target debt. The only difference is which debt is the target.
- Avalanche: target the highest interest rate first. This minimises total interest, because the most expensive money is repaid soonest.
- Snowball: target the smallest balance first. Interest cost is usually a little higher, but debts disappear sooner, which some people find motivating enough to keep going.
When a debt is cleared, the payment that went to it, minimum included, rolls into the next target. This rolling is what makes the plan accelerate, and why the budget (the sum of minimums plus extra) is kept constant in the simulation.
How the simulation works
Each month, interest of balance × rate ÷ 12 is added to each debt. Then the minimum payment is made on each remaining debt (or the balance, if smaller), and whatever is left of the monthly budget goes to the target debt, spilling over to the next if the target is cleared. The process repeats until every balance is zero or 100 years pass, in which case the tool tells you that the payments are too low. Because the results come from simulation rather than a formula, the exact figures can differ slightly from your statements, which may calculate interest by days.
Choosing between them
If the two plans finish in a similar time and the interest difference is small, pick the one you will stick to. If one debt has a much higher rate, avalanche saves real money. Consider also whether a debt carries a penalty, a promotional rate that is about to end, or a tax-deductible interest rule where you live; these change the order that makes sense and are not modelled. For one card, use the credit card payoff calculator, and for a single instalment loan see the loan calculator.
Limits
The calculator ignores new purchases, fees, changing rates and missed payments. It does not consider consolidation or balance transfers, which can alter the rates. Treat the output as a plan to test, and revisit it when balances or rates change.
A useful experiment is to change the extra amount in small steps. Adding even a modest sum early often shortens the plan by many months, because the freed minimum payments roll forward and accelerate every later debt. Also run the plan with the second strategy and compare the debt-by-debt clearing months in the results: the snowball plan usually clears the first debt sooner, while the avalanche plan usually finishes with less interest.
Worked example
Four debts: 3,200 at 24.99%, 7,800 at 11.5%, 1,500 at 18% and 14,000 at 6.2%, with 300 extra each month.
Inputs
| Plan to show in detail | Avalanche: highest rate first |
|---|---|
| Extra payment each month | 300 |
| Debt 1 balance | 3200 |
| Debt 1 interest rate | 24.99 % |
| Debt 1 minimum payment | 95 |
| Debt 2 balance | 7800 |
| Debt 2 interest rate | 11.5 % |
| Debt 2 minimum payment | 180 |
| Debt 3 balance | 1500 |
| Debt 3 interest rate | 18 % |
| Debt 3 minimum payment | 45 |
| Debt 4 balance | 14000 |
| Debt 4 interest rate | 6.2 % |
| Debt 4 minimum payment | 310 |
Result
Avalanche plan with total interest of 3,332.91.
| Total owed today | 26,500.00 |
|---|---|
| Total monthly budget (minimums plus extra) | 930.00 |
| Avalanche: months to be debt-free | 33 |
| Avalanche: total interest | 3,332.91 |
| Snowball: months to be debt-free | 33 |
| Snowball: total interest | 3,416.64 |
| Interest difference | 83.73 less with avalanche |
| Debt 1 cleared in month | 9 |
| Debt 2 cleared in month | 24 |
| Debt 3 cleared in month | 12 |
| Debt 4 cleared in month | 33 |
- Both plans pay the same total each month. When a debt is cleared, its minimum payment rolls into the next target debt.
- The plan assumes no new borrowing, fixed rates and interest added monthly before payments.
Financial disclaimer: Results are estimates for planning and education. They are not financial, tax or legal advice. Fees, taxes, rates and rules vary by lender, product and country, so confirm figures with your provider or a qualified adviser before making decisions.
Frequently asked questions
What is the debt avalanche method?
You pay the minimum on every debt and put all extra money on the debt with the highest interest rate, moving on when it is cleared. It minimises interest cost.
What is the debt snowball method?
You target the smallest balance first. Each cleared debt frees its payment for the next, which builds momentum even if the interest cost is slightly higher.
Which method saves more money?
Avalanche saves at least as much interest as snowball for the same budget, because it repays the costliest debt first.
Why does the calculator say my payments never clear the debt?
The minimum payment is not enough to cover the monthly interest, so the balance never falls. Increase the payment.
Can I use it for one debt?
Yes. Leave the other debts blank and the two methods will give the same result.
Related calculators
References and sources
- Consumer Financial Protection Bureau: educational guides on managing and paying down debt. Link
- Monthly interest accrual and payment simulation as in standard personal finance texts.