The debt avalanche method usually saves the most interest because it targets the highest APR first. The debt snowball method can be easier to stick with because it pays off the smallest balance first.
Use the Calculator
Formula and Method
monthly interest = outstanding balance × annual rate ÷ 12
Both methods make every minimum payment and direct the remaining monthly budget to one target debt. Avalanche targets the highest interest rate; snowball targets the smallest balance. Recalculate after each payoff because the freed minimum payment rolls into the next target.
Worked Example
List minimum payments
$150 + $250 = $400/month
Every account remains current before extra money is assigned.
Find the extra payment
$500 budget − $400 minimums = $100/month
This amount goes to the selected target debt.
Choose a strategy
avalanche → 18.99% card; snowball → $5,000 balance
The default example points both methods to the card, but other debt lists can produce different orders.
When Avalanche Wins
Use avalanche when interest savings are the priority and you can stay motivated without quick balance eliminations.
When Snowball Wins
Use snowball when momentum matters. Paying off a small account can create the behavioral reward needed to continue the plan.
How the payoff simulation runs each month
The calculator steps through your debts one month at a time. For every open balance it adds one month of interest at the annual rate ÷ 12, then pays the minimum, or the whole balance if that is smaller. The rest of your monthly budget goes to the target debt: the smallest starting balance under snowball, the highest APR under avalanche. If the target is cleared with money left over, the remainder flows to the next debt in line that same month. The run ends when every balance reaches zero or after 1,200 months.
The monthly budget is the input with the most pull. Every dollar above the sum of minimums speeds up the target, and because the budget stays fixed as accounts close, each freed minimum rolls forward on its own. A higher APR on any account adds interest every month; a large minimum on a low-rate loan takes money away from the target. The priority order is set once from the starting balances or rates and is not re-ranked later.
Second worked example: when the two methods pick different targets
Inputs: store card $800 at 12% APR with a $40 minimum; Visa $6,000 at 24% APR with a $180 minimum; car loan $9,000 at 6% APR with a $300 minimum; monthly budget $700. Minimums total $520, leaving $180 of extra payment.
Month 1 interest: $800 × 0.12 ÷ 12 = $8.00; $6,000 × 0.24 ÷ 12 = $120.00; $9,000 × 0.06 ÷ 12 = $45.00. After minimums the balances are $768, $5,940 and $8,745. Snowball sends the $180 to the store card, leaving $588. Avalanche sends it to the Visa, leaving $5,760.
Carried to the end, snowball closes the store card in month 4, the Visa in month 21 and the car loan in month 26, paying $2,282.79 of interest. Avalanche closes the Visa and the store card in month 21 and the car loan in month 26, paying $2,183.49. Both finish in 26 months; avalanche costs $99.30 less because the 24% balance shrinks first.
Choosing between the two with your own list
The Consumer Financial Protection Bureau describes both approaches: the snowball focuses on your smallest debt, while the highest-interest-rate approach goes after the debts with the highest rate first. When your smallest balance also carries your highest rate, as in this page's default card-and-loan example, both plans produce the same schedule and the choice does not matter.
The gap widens when a large balance carries the top APR and several small accounts sit at low rates. Run your list both ways. If avalanche saves only a small sum, the early account closures from snowball may be worth that price; if it saves hundreds of dollars, the plan that feels faster is the expensive one.
Limits and edge cases
- Interest is charged monthly at APR ÷ 12. Many card issuers calculate interest daily from the average daily balance, so actual statements can differ by small amounts each month.
- Promotional 0% periods, balance-transfer fees, late fees and minimums that shrink with the balance are not modeled; each minimum stays a fixed dollar amount.
- New purchases or new loans after the start are ignored.
- If the budget is below the total of minimums, the tool flags it, and the timeline no longer reflects what a lender would actually do.
- An account whose minimum does not cover its monthly interest keeps growing until the extra payment reaches it.
Disclaimer: This compares two repayment orders under fixed rates and fixed minimums. A lender's daily interest method, fees, rate changes or hardship terms can move the payoff date, so confirm balances and terms with each creditor before committing to a plan.
Sources checked
- CFPB: How to reduce your debt: Describes the snowball (smallest debt) and highest-interest-rate methods. (checked 2026-10-22)
- CFPB: How does my credit card company calculate the amount of interest I owe?: Many issuers compute interest daily on the average daily balance (daily periodic rate). (checked 2026-10-22)
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Frequently Asked Questions
Which method is mathematically best?
Avalanche is usually mathematically best because it attacks the highest interest rate first.
Which method is emotionally easier?
Snowball can be easier because it creates faster visible wins by closing smaller balances first.
Can I combine both methods?
Yes. Many people pay off one or two small balances first, then switch to avalanche for the remaining debt.
Does leftover money roll to the next debt in the same month?
Yes. If the target debt is paid off with part of the monthly budget unused, the remainder is applied to the next debt in priority order that same month.
Why do snowball and avalanche show the same result?
When your smallest balance also has your highest interest rate, both methods target the same debt first and produce identical schedules. The default card-and-loan example works this way.
How does the calculator charge interest?
Each month it adds the annual rate divided by 12 to every open balance before payments. Card issuers that charge interest daily may show slightly different amounts.