Debt Snowball vs. Avalanche Calculator

Snowball vs. avalanche: how they work

Both methods use the same monthly budget: the minimum on every debt plus an extra amount. Every debt gets its minimum, and all the extra goes to one target debt. When the target is paid off, its minimum payment “rolls” into the next one, so the payment aimed at each debt keeps growing.

• Debt snowball: target the smallest balance first. You clear whole debts sooner, which many people find motivating.
• Debt avalanche: target the highest APR first. With the same budget this costs the same or less interest, because the most expensive balance shrinks first.

Example

Four debts totaling $23,000: a $6,500 card at 24.99% ($195 minimum), an $11,000 car loan at 6.9% ($340), a $1,500 loan at 9% ($60) and a $4,000 personal loan at 14.5% ($140), plus $300 extra a month, for $1,035 in total.

• Avalanche pays the card first and costs $3,064.22 in interest.
• Snowball pays the $1,500 loan first and costs $3,611.45.

Both plans are debt-free in 26 months, and the avalanche saves $547.23. The snowball wins its first payoff in month 5; the avalanche takes until month 16. Without the $300 extra, payoff would take 3 years 4 months and about $6,278 in interest.

Which method should you choose?

If you will stick with either plan, the avalanche is cheaper. The gap is small when your APRs are close or your balances are small, and large when a big balance carries a high rate. If quick wins keep you going, the snowball's extra cost may be worth it. A plan you finish beats a cheaper plan you abandon. Either way, the biggest savings come from the extra payment itself.