How the debt snowball vs. avalanche calculator works
Both methods use the same total monthly budget: the sum of all your minimum payments plus any extra amount you can add. They differ only in which debt receives the money left over after every minimum is paid.
- B
- Balance of a debt at the start of the month
- APR
- Its annual percentage rate; the monthly rate r is APR ÷ 12
- m
- Its required minimum payment
- E
- The extra amount you add each month
Each month the calculator repeats four steps for every debt with a balance:
- Charge a month of interest: B × APR ÷ 12, rounded to the cent.
- Pay each debt its minimum, or the full balance if that is smaller.
- Send whatever is left of the budget to the target debt: the smallest balance for the snowball method, or the highest APR for the avalanche method. If the target is paid off mid-month, the remainder moves on to the next debt in line.
- When a debt reaches zero, its minimum payment stays in the budget and "rolls" onto the next target. That rolling payment is the snowball.
The order is set from your starting balances and rates and stays fixed for the whole plan.
How long one debt takes at a fixed payment
For a single debt paid M a month, the number of months to reach zero has a closed form:
It only has an answer when M is larger than the first month's interest, rB. A $6,200.00 card at 24.99% charges about $129.12 of interest in the first month, so a $186.00 payment clears it in about 58 months. The calculator's minimum-payments column runs the same arithmetic month by month for every debt at once.
Worked example: four debts, $300 extra a month
A household owes four debts totaling $24,050.00:
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Visa card | $6,200.00 | 24.99% | $186.00 |
| Store card | $1,350.00 | 29.99% | $45.00 |
| Car loan | $11,800.00 | 7.9% | $365.00 |
| Personal loan | $4,700.00 | 12.5% | $160.00 |
The minimums add up to $756.00. With $300 extra, the budget is $1,056.00 a month. Here is how the three approaches play out:
| Snowball | Avalanche | Minimums only | |
|---|---|---|---|
| Months to debt-free | 27 | 27 | 58 |
| Total interest | $3,968.29 | $3,579.25 | $8,119.20 |
| Total paid | $28,018.29 | $27,629.25 | $32,169.20 |
The snowball pays off the Store card, then Personal loan, then Visa card, then Car loan. The avalanche goes Store card, then Visa card, then Personal loan, then Car loan. Both clear the Store card first, since it is both the smallest balance and the highest rate, and both finish in 2 years 3 months. But the avalanche attacks the 24.99% Visa balance before the 12.5% personal loan, and that saves $389.04 of interest.
The bigger lesson is in the last column. Paying only the minimums takes 4 years 10 months and costs $8,119.20 in interest, more than twice as much as either plan. Raising the extra payment from $300 to $400 under the avalanche method finishes in 2 years with $3,125.71 of interest.
Debt snowball or avalanche: which should you choose?
The avalanche method almost always pays the least interest, because every spare dollar goes to the most expensive balance. The snowball method trades some of that saving for faster early wins: the first account disappears sooner, which many people find motivating. In a study of consumer debt published in the Journal of Marketing Research in 2012, David Gal and Blakeley McShane found that people who closed out individual debts were more likely to eliminate their overall debt. The best plan is the one you will keep following.
| If this sounds like you | Lean toward |
|---|---|
| You want the lowest total cost and can stay motivated by a long first goal | Avalanche |
| You have struggled to stick with a payoff plan before | Snowball |
| Your highest-rate debt is also your smallest | Either; they pick the same order |
| Rates are close together, say within a few points | Snowball; the interest cost of choosing it is small |
| One balance is large with a very high APR | Avalanche; the savings are usually substantial |
Ways to speed up either plan
- Stop adding new balances. A payoff plan only works if the total isn't growing behind it.
- Lower the rates. Ask card issuers for a lower APR, or compare a balance transfer card (watch the transfer fee and when the promotional rate ends) or a fixed-rate consolidation loan.
- Send windfalls to the target debt. Tax refunds, bonuses and raises applied to the current target shorten the plan the most.
- Get help if the numbers don't work. If the budget barely covers interest, a nonprofit credit counseling agency can review options such as a debt management plan.
Once your high-interest debt is gone, the same monthly budget can build savings; the high-yield savings calculator shows how quickly it adds up. If a car loan is part of your list, the auto loan early payoff calculator shows the effect of extra payments and refinancing on that loan alone.
The bottom line
The debt avalanche costs less, and the debt snowball gives you early wins. In the four-debt example with $1,056 a month, the avalanche saves $389.04 of interest over the snowball, and both are debt-free years sooner than minimum payments alone (4 years 10 months).
The method you will stick with beats the one that is best on paper. Enter your own balances in the debt snowball vs. avalanche calculator, pick an order, and keep the total monthly payment the same as each debt disappears.
Frequently asked questions
What is the difference between the debt snowball and debt avalanche methods?
Both are plans for paying off multiple debts. They pay the minimum on every debt and put all extra money toward one target debt at a time, rolling each paid-off debt's payment onto the next target. The snowball method targets the smallest balance first. The avalanche method targets the highest interest rate first. They use the same monthly budget; only the order changes.
Which saves more money, snowball or avalanche?
The avalanche method usually saves more, because it eliminates the most expensive interest first. In our four-debt example with $1,056 a month, the avalanche costs $3,579.25 in interest and the snowball $3,968.29, a difference of $389.04. When the smallest debt also has the highest rate, both methods choose the same order and cost the same.
Why would anyone choose the debt snowball if it costs more?
Because paying off whole accounts quickly can keep you motivated, and a plan you stick with beats a cheaper plan you abandon. Research on consumer debt has found that people who close out individual accounts are more likely to pay off their debt overall. If your interest rates are close together, the extra cost of the snowball is often small.
How long will it take to pay off a credit card with minimum payments?
Use N = −ln(1 − rB ÷ M) ÷ ln(1 + r), where B is the balance, r is the APR divided by 12 and M is the payment. A $6,200.00 balance at 24.99% paid at $186.00 a month takes about 58 months. Real card minimums usually shrink as the balance falls, which makes the payoff take even longer; your statement shows the issuer's own estimate of the minimum-payment payoff time.
Should I include my mortgage or car loan in the plan?
You can include any debt with a balance, rate and minimum payment. Many people list only consumer debts such as credit cards, personal loans and car loans, and leave a low-rate mortgage on its normal schedule. Including a large low-rate loan rarely changes the order under the avalanche method, but it can make the snowball method's later targets very large.
What happens to my payment when a debt is paid off?
In both methods, the payment you were making on the cleared debt is not spent elsewhere. It is added to the payment on the next target debt, so the amount going toward each new target grows as you go, which is what brings your debt-free date forward. This debt payoff calculator keeps your total monthly budget constant until every debt is paid.
Sources and further reading
- Credit cards (opens in a new tab), Consumer Financial Protection Bureau
- Consumer Credit (G.19) (opens in a new tab), Board of Governors of the Federal Reserve System
Related calculators
- Auto Loan Early Payoff CalculatorHave a car loan in the mix? See exactly what paying it off early saves.
- High-Yield Savings CalculatorBuild an emergency fund that earns interest so new debt doesn't creep back.
- Compound Interest CalculatorSee what your freed-up debt payments grow to once you invest them.