Bureau of Wealth

Debt Payoff Calculator: Avalanche or Snowball

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Add each debt's balance, APR and minimum payment, set the total you can pay each month, and see your debt-free date, the order your debts clear and how much you save over paying only the minimums.

Your debts

Include the minimums. Anything above them goes to one debt at a time.

Which debt gets the extra first?

Check the highlighted fields to see your results.

What this calculator assumes

  • Each debt's APR stays the same and interest is added monthly at the APR divided by 12.
  • Minimum payments are fixed amounts. Credit card minimums usually fall as the balance falls, so the minimums-only comparison is a guide rather than what your card statements will show.
  • You pay the full monthly budget every month, pay every minimum first, and send whatever is left to one debt at a time.
  • When a debt is paid off, its minimum payment stays in your budget and moves to the next debt.
  • You add no new charges to any of the debts, and no fees, promotional rates or penalty rates are included.

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How the plan is worked out

Each month the calculator adds a month of interest to every debt, pays the minimum on each one, and puts the rest of your budget toward a single target debt. Once that debt is cleared, the money that was going to it, including its old minimum, rolls on to the next target. Because your total payment never drops, the amount going to each new target keeps growing. The calculator repeats this until every balance is zero, then reports the months taken, the total interest and the month each debt was paid off.

It also runs a second plan where you pay only the minimums and nothing extra, with no rollover when a debt clears. The difference in interest between the two is the saving shown under the result.

Avalanche or snowball

The Consumer Financial Protection Bureau describes two basic strategies. The highest interest rate method, often called avalanche, sends extra money to the debt with the highest APR first, because it is costing you the most. The snowball method targets the smallest balance first so you see debts disappear sooner, and the CFPB notes you may pay more over time with it. Either way, keep making the minimum payment on every debt.

A worked example

Say you owe $6,000 on a credit card at 24% APR with a $180 minimum, $2,500 on a personal loan at 11% with a $110 minimum, and $9,000 on a car loan at 7% with a $250 minimum. You can pay $700 a month in total.

With avalanche, the credit card goes first and clears in month 22, the personal loan in month 23 and the car loan in month 29. You pay $2,772.99 in interest. With snowball, the personal loan clears in month 10, which feels good, but you finish in month 30 and pay $3,059.71, about $287 more. Paying only the minimums would take 56 months and cost $5,434.84 in interest. Raising the budget to $900 with avalanche clears everything in 22 months for $1,894.47.

Making the plan work

How much you pay above the minimums can matter more than the order you choose. In the example, moving from snowball to avalanche saves about $287, while adding $200 a month to the avalanche plan saves about $880 and seven months. Pick the method you are most likely to stick with, and stop adding new charges to the cards while you pay them down.

If most of what you owe is on one credit card, the credit card payoff calculator shows what monthly payment clears it by a date you choose and how long the minimum payment alone would take.

Frequently asked questions

Which is better, avalanche or snowball?

Avalanche usually costs less in interest when your debts have different rates, because the most expensive balance shrinks first. Snowball can cost more but gives you early wins, which some people find easier to keep going with. Run both in the calculator to see how big the gap is for your debts.

What should my monthly budget include?

Enter the total you can put toward these debts each month, including all the minimum payments. The calculator needs that total to at least cover the minimums.

Why does it say my debts would never be paid off?

If the interest added each month is more than you pay, the balance keeps growing. Raise the monthly budget or check that the minimum payments and APRs you entered are right.

Should I include my mortgage?

Usually not. Mortgages tend to have lower rates and much longer terms, so including one mainly shows the long tail of that loan. Focus the plan on credit cards, personal loans, medical bills and car loans.

What if my minimum payments are more than I can afford?

The CFPB advises calling your credit card company straight away, explaining your situation and deciding how much you can afford to pay. Nonprofit credit counseling organizations can also help you set up a debt management plan.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.