Debt payoff calculator: snowball vs avalanche

You pay the minimum on every debt and put any extra money on the smallest balance first. When it’s paid off, its payment rolls onto the next smallest, so the amount you’re putting toward debt grows like a snowball. Clearing small balances early gives quick wins, which helps some people stay on track.

You pay the minimum on every debt and put any extra money on the debt with the highest interest rate first, then roll that payment onto the next highest rate. Because the most expensive debt shrinks first, it usually costs the least interest overall.

Avalanche usually costs less interest; when your smallest debt also has the highest rate, the two methods give the same result. With the example debts above ($7,000 at 20.99%, $1,200 at 29.99% and $2,500 at 9.5%) and $200 a month extra, avalanche costs about $2,215 in interest over 26 months and snowball about $2,531 over 27 months, a difference of about $316.

It depends on the balance, the rate and what you pay each month. A $5,000 balance at 20.99% paid at $250 a month takes about 25 months and costs about $1,207 in interest. Enter your own debts above to see your date.

You stay in debt far longer and pay much more interest. In the example above, paying only the minimums takes about 64 months and $5,335 in interest, compared with 26 months using avalanche and an extra $200 a month. In Canada, your credit card statement must show an estimate of how long it would take to pay off the balance making only minimum payments, as the Financial Consumer Agency of Canada (FCAC) explains.

Each issuer sets its own formula, usually a small percentage of the balance, sometimes plus interest and fees, with a minimum dollar amount. Check your cardholder agreement or statement for the exact rule. Because the minimum often falls as the balance falls, this calculator holds each minimum at the amount you enter, which pays debt off a little faster than a shrinking minimum would.

It can be when the new loan or card has a lower interest rate than your current debts and you stop adding new balances. It can backfire if the term is much longer, the fees are high, or the cleared cards fill up again. Compare the total interest with this calculator before and after.

A promotional balance transfer rate can cut the interest on your highest-rate card for a set number of months, so more of each payment reduces the balance. Watch the transfer fee and the rate after the promotion ends. Our balance transfer calculator compares both paths.

Pay more than the minimum, aim extra money at the highest rate first (the avalanche method) and keep paying the same total each month as debts drop off. Moving a high-rate balance to a lower rate, and not adding new charges, speeds things up further.