Debt Payoff Calculator

Avalanche and snowball, and which one clears debt faster

Both methods start from the same rule: pay at least the minimum on every debt, every month, without exception. The difference is only where the extra money goes. Avalanche sends every spare dollar to the debt with the highest interest rate. Snowball sends it to the smallest balance. When a debt is cleared, its payment is added to the pot and rolls onto the next target, which is why both approaches accelerate over time.

Avalanche is mathematically better. Interest accrues on balances at a rate, so killing the highest rate first removes the most expensive dollar of debt available at any moment. There is no set of balances and rates where snowball beats avalanche on total interest. If the only question is cost, the answer is avalanche and it is not close to being in dispute.

Why snowball still wins for many people

Debt repayment is not only an arithmetic problem. It is a multi year behavioural commitment made by tired people with competing demands on their money. Snowball closes accounts sooner. Watching a balance hit zero, then another, produces visible progress early, which sustains motivation through the long middle stretch where nothing feels like it is moving. Research on consumer debt repayment has repeatedly found that people using the smallest balance approach are more likely to keep going.

The honest summary is this: avalanche is optimal on paper, snowball is often optimal in practice, and the plan you actually finish beats the plan you abandon in month seven. Run both above. If the interest difference is small, which it often is when the rates are clustered together, the behavioural argument for snowball is strong. If the difference is large, usually because one debt carries a much higher rate than the rest, avalanche is worth the patience.

How the calculator works

Each month the model accrues interest on every open balance at one twelfth of the annual rate, applies each minimum payment, then applies your extra payment plus any freed up minimums to the target debt chosen by the selected method. It repeats until every balance reaches zero, or flags the situation if the payments never get there.

When ordering is not the real problem

If minimum payments barely cover the monthly interest, no ordering strategy will fix it. That is a cash flow problem, not a sequencing problem. The levers that actually work are increasing the total monthly amount, reducing the rate through a balance transfer or a consolidation loan, or getting help from a non profit credit counselling agency that can negotiate a management plan. Balance transfers and consolidation carry their own fees and risks, particularly the risk of running the cleared cards back up.

Things the model leaves out

• Late fees, penalty interest rates and promotional rates that expire.
• Minimum payments that shrink as the balance falls, common on credit cards.
• New borrowing added during the payoff period.
• Tax deductible interest, such as some student loan interest.

Because credit card minimums usually decline with the balance, real payoff timelines are often slightly longer than a fixed minimum model suggests. That makes the extra payment the single most important input on this page.

This tool describes how the maths behaves. It is not advice about your situation, and debt decisions interact with credit, tax and legal matters. Talk to a qualified professional before restructuring debt, and read our terms of use for the full disclaimer.