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Debt snowball calculator: snowball or avalanche?
The avalanche method, highest interest first, is faster and cheaper on paper. The snowball method, smallest debt first, clears one debt sooner, and that early win keeps many people going. Both work the same way: pay the minimum on every debt and put everything extra on one. The only difference is which one. Type two debts and what you can pay in total to see both orders.
- Interest, highest rate first1,535.01
- Interest, smallest debt first1,854.17
Highest rate first: done in 33 months, and the first debt is gone in month 29. Smallest first: done in 35 months, and the first debt is gone in month 13. Highest rate first saves 319.16 of interest.
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How does the avalanche method work?
- List your debts by interest rate, highest first.
- Pay the minimum on all of them.
- Put every extra unit of money on the one with the highest rate.
- When it is gone, move its whole payment to the next highest.
Each payment goes where it stops the most interest, so the total cost is the lowest possible.
How does the snowball method work?
- List your debts by balance, smallest first.
- Pay the minimum on all of them.
- Put everything extra on the smallest one.
- When it is gone, move its whole payment to the next smallest.
The payment grows each time a debt is finished, like a snowball. You pay a little more interest, but you see a debt disappear early.
What is the difference in money?
Take two debts: 1,000 at 10% a year and 4,000 at 24% a year, with 200 a month to pay in total.
| Highest rate first | Smallest first | |
|---|---|---|
| All debts cleared in | 33 months | 35 months |
| First debt gone in | month 29 | month 13 |
| Interest paid | 1,535.01 | 1,854.17 |
Avalanche saves 319.16 and two months. Snowball finishes one debt sixteen months earlier.
The gap depends on your debts. It is wide when the largest debt also has the highest rate, as here. When your smallest debt is also the most expensive, the two methods are the same list and there is nothing to choose.
Which one should I pick?
| Pick | If |
|---|---|
| Avalanche | you are patient with numbers, or one rate is far above the others |
| Snowball | you have started and stopped before, or you have many small debts |
A plan you follow for three years beats a cheaper plan you drop after three months. If you are unsure, start with the snowball to finish one debt, then switch to the avalanche for the rest.
What about debts with no interest?
Money owed to family or friends, or a payment plan at 0%, costs nothing to carry. On the avalanche list these go last. With the snowball, they sit wherever their size puts them.
There is one reason to move a debt up either list: the person needs the money. That counts for more than the math.
What do I do when a debt is finished?
Keep paying the same total. The payment that went to the finished debt moves to the next one the same month. This is the step that makes both methods work, and the one people skip.
If the freed money goes back into daily spending, the remaining debts take as long as they did before.
How much should I pay in total each month?
Enough that the extra amount is real. If the total only covers the minimums, neither method changes anything, because there is nothing extra to direct.
Take the debt payment from what is left after giving and bills, and give it the largest share until the debts are gone. Whether to build savings at the same time is covered in should you pay off debt or save first, and what a single card costs at your payment is in how credit card interest works.