Debt Payoff Calculator: Snowball vs Avalanche

Example Calculation

Three debts: a $5,000 credit card at 22.9% (minimum $150), an $8,000 car loan at 7.5% (minimum $250) and a $3,000 personal loan at 11% (minimum $100), plus $200 extra a month.

The snowball (smallest balance first) finishes in 27 months with about $2,471 in interest. The avalanche (highest rate first) finishes in 26 months with about $2,142. The avalanche saves about $330, but the snowball clears its first debt in month 11 instead of month 17.

How It Works

This debt payoff calculator simulates two popular strategies using the exact same monthly budget so the comparison is fair. Your budget equals the sum of all minimum payments plus any extra amount you add. Each month, interest is added to every balance, every debt receives at least its minimum, and all remaining money goes to one target debt.

With the snowball method, the target is the debt with the smallest balance. When it is paid off, its former payment “rolls” into the next-smallest debt. Snowball delivers quick wins that keep many people motivated. With the avalanche method, the target is the debt with the highest interest rate, which mathematically minimizes total interest paid and usually gets you debt-free a little sooner.

The results show the number of months to become debt-free, the total interest under each strategy, the projected payoff month and the order in which debts are eliminated. The headline number is the interest difference between the two methods. If it is small, choose the one you will actually stick with; consistency matters more than the last few dollars of optimization.

To get the most from the tool, list every debt — credit cards, personal loans, auto loans, student loans — using the current balance, APR and required minimum payment. Try raising the extra payment by $50 or $100 to see how quickly your debt-free date moves. If your payments do not cover monthly interest on a balance, the tool warns you, because that debt would never be repaid at the current payment level.

Formula Explained

Each month, for every debt: balance = balance × (1 + APR ÷ 12), then minimum payments are applied, and the leftover budget goes to the target debt.

Snowball target = lowest balance. Avalanche target = highest APR. Budget = Σ minimums + extra, constant until all debts are paid.

Assumptions and limits

• Interest is added monthly at each debt’s APR divided by 12 before payments are applied.
• Your monthly budget (all minimums plus the extra amount) stays the same until every debt is paid. When a debt is paid off, its payment rolls to the next target.
• Both methods use the same budget, so the only difference is the order in which debts are paid.
• You make no new charges and no fees, rate changes or promotional-rate endings occur. The minimums are fixed amounts you enter, although real credit card minimums usually shrink as the balance falls.
• If your payments do not cover the monthly interest, the tool shows an error instead of a result.