Paying off several debts: avalanche or snowball
If you have several debts, the order you pay them in changes how long it takes and how much interest you pay. Compare the avalanche method (most expensive first) with the snowball (smallest first).
Total debt month by month with each method
Payoff order
| Debt | Avalanche: paid off in | Snowball: paid off in |
|---|
Which debt to pay first: avalanche or snowball
Enter your debts with their balance, interest rate and minimum payment, and what you can put towards them each month. The calculator compares the two best-known methods: avalanche (highest interest rate first) and snowball (smallest balance first), and tells you when you will be debt-free and how much interest you will pay.
Example: with a 2,500 credit card at 22%, an 8,000 car loan at 7%, a 4,000 personal loan at 11% and 600 of store finance at 18%, paying 600 a month you are done in 2 years and 5 months. With the avalanche you pay 1,774 in interest and with the snowball 1,793, but the snowball clears the first debt in month 4 instead of month 12.
How it is calculated
- Each month every debt builds interest (annual rate ÷ 12) and you pay its minimum.
- Whatever is left of your budget goes to a single debt: the one with the highest rate (avalanche) or the smallest balance (snowball).
- When a debt is paid off, its payment rolls over to the next one.
Assumptions
- No new purchases or fees.
- Fixed interest rates.
- Your monthly budget must cover at least the minimum payments.
Frequently asked questions
What is the debt avalanche method?
Paying the minimum on every debt and putting everything left over towards the one with the highest interest rate. When it is cleared, that money moves to the next most expensive. It pays the least interest.
What is the debt snowball method?
The same, but starting with the smallest balance. You pay a little more interest, but you close debts sooner, which helps you keep going.
Which one is better?
In pure numbers, the avalanche never costs more interest. The difference is usually small, as in the example (19), so the best method is the one you will stick with.
Why does a cleared debt's payment roll over to the next?
Because that money was already part of your budget. If you keep putting it towards debt, each one is paid off faster than the last: hence the name snowball.
What if I cannot afford the minimum payments?
The calculator warns you. In that case, talk to your creditors, look for a consolidation loan with a lower total cost or get debt advice before you stop paying.
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