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Debt Payoff Order (avalanche vs snowball)

If you have several debts and one fixed amount to put at them each month, the question is which one gets the extra money. Two strategies dominate the advice: avalanche, meaning highest interest rate first, and snowball, meaning smallest balance first. They give different answers and almost nobody gets to see what the difference actually is for their own numbers. Paste your debts — name, balance, annual rate, minimum payment — enter what you can afford in total, and this runs the real month-by-month amortisation for both, plus any order you want to try. Interest accrues on every balance, minimums are paid on everything, the rest goes at the target, and when a debt clears its minimum rolls onto the next one. You get months to debt-free, total interest, total paid and the month each debt clears, for each strategy, and the difference between them stated plainly in money and in months. All the arithmetic is in whole cents, so the schedule and the totals reconcile exactly. It does not recommend a strategy — that is deliberate — and if your available amount is less than your minimums it says so and stops rather than printing a schedule that could never happen. Runs entirely on your device; your balances are never sent anywhere.

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Worked example

DEBT PAYOFF ORDER — 3 debts, $400.00 available each month DEBTS AS READ 1. Card A $1,000.00 at 24.00% minimum $50.00 month-1 interest $20.00 2. Card B $500.00 at 12.00% minimum $25.00 month-1 interest $5.00 3. Car loan $2,000.00 at 6.00% minimum $100.00 month-1 interest $10.00 Balances $3,500.00 · minimums $175.00 · available $400.00 · left over for the target $225.00 AVALANCHE — highest annual rate first Order: Card A → Card B → Car loan Debt-free in 10 months Total interest $138.04 Total paid $3,638.04 (= $3,500.00 of balances + $138.04 interest) Cleared: Card A month 4 · Card B month 6 · Car loan month 10 SNOWBALL — smallest balance first Order: Card B → Card A → Car loan Debt-free in 10 months Total interest $154.64 Total paid $3,654.64 (= $3,500.00 of balances + $154.64 interest) Cleared: Card B month 3 · Card A month 6 · Car loan month 10 CUSTOM ORDER — no order typed, so the order you pasted them in Order: Card A → Card B → Car loan Debt-free in 10 months Total interest $138.04 Total paid $3,638.04 (= $3,500.00 of balances + $138.04 interest) Cleared: Card A month 4 · Card B month 6 · Car loan month 10 AVALANCHE vs SNOWBALL — the difference for YOUR numbers Avalanche: 10 months interest $138.04 Snowball: 10 months interest $154.64 Snowball costs $16.60 more in interest (12.03% more) and finishes in the same number of months. Avalanche aims at the highest rate, so it is the one that spends less on interest here. Snowball aims at the smallest balance, so individual debts disappear sooner — look at the 'Cleared' lines above to see how much sooner. That is the whole trade-off, and it is often smaller than people expect. A plan someone actually keeps to beats a cheaper plan they abandon, and no arithmetic on this page can tell you which of those you are. This tool does not pick one for you. PAYOFF SCHEDULE — AVALANCHE, first 10 months Target now: Card A — it gets its minimum plus everything left over. month 1 → Card A $275.00 · Card B $25.00 · Car loan $100.00 month 2 → Card A $275.00 · Card B $25.00 · Car loan $100.00 month 3 → Card A $275.00 · Card B $25.00 · Car loan $100.00 month 4 → Card A $223.99 · Card B $76.01 · Car loan $100.00 month 5 → Card B $300.00 · Car loan $100.00 ** target moves here month 6 → Card B $72.17 · Car loan $327.83 month 7 → Car loan $400.00 ** target moves here month 8 → Car loan $400.00 month 9 → Car loan $400.00 month 10 Car loan $38.04 (→ marks the debt the extra money is aimed at that month.) HOW THIS IS COMPUTED · Everything is done in whole cents. Each month, interest accrues on every balance, then the minimum is paid on each debt, then every cent left over goes to the target — and cascades to the next debt in the order if the target clears part-way through the month. · Monthly interest is balance × annual rate ÷ 12, rounded to the nearest cent with halves going away from zero. The same rule is used for every debt in every strategy, so the comparison measures the strategies and not the rounding. · A payment is never larger than what is owed, so the last month lands on exactly $0.00 — no residual cent, no overpayment. · When a debt clears, the pot is unchanged but its minimum is no longer spent on it, so that money lands on the next target. That rolling is simulated, not estimated. · The simulation stops after 1,200 months. If a run reaches that, the output says so instead of reporting a payoff. WHAT THIS ASSUMES — and real life rarely does · Every rate is fixed and never changes. Variable and promotional rates do change. · You borrow nothing new and add nothing to any of these balances. · You pay the same total every single month, on time, with no fees, no missed payments, no penalty rates and no interest-free periods. · The numbers you typed are the numbers on your statements. Change any one of those and the months and totals move. WHAT THIS IS NOT · It does not recommend a strategy, and it does not call one better. · It says nothing about consolidation, refinancing, balance transfers, settlement, bankruptcy or credit scores. It computes payoff orders, and that is all it does. · No rate, fee, minimum or 'typical' figure is built in. The example numbers on this page are invented so the page can show a working calculation; replace every one of them with the figures from your own statements. · It is not financial advice.

How it’s solved

Worked on the example above, step by step — follow along and you can do it on paper next time, no tool required.

  1. Every strategy pays the minimum on every debt each month. The only question is where the money left over after the minimums goes.
  2. Interest is charged on each balance first, then the payment is applied — so a month's interest is always calculated on what you owed at the start of it, not what is left at the end.
  3. Avalanche sends the spare money to the highest interest rate. That is the mathematically cheapest order, because you are always killing the most expensive debt first.
  4. Snowball sends it to the smallest balance. You clear individual debts sooner, which is why people stick with it — and it usually costs a little more overall.
  5. The mechanism that makes either work is the roll-over: when a debt clears, its minimum does not go back into your pocket, it joins the pot aimed at the next target. The pot grows every time something clears, which is why the last debts fall fast.
  6. The comparison is the point. If snowball costs you very little extra, that is a real finding — the plan you keep to beats the optimal one you abandon. This tool shows both numbers and does not choose for you.

Learn the method

Avalanche vs snowball: what the payoff order actually costs

Inputs

Frequently asked

What format do the lines take?

One debt per line: name | balance | annual rate % | minimum monthly payment. Separate the fields with a pipe, semicolon or tab. A comma works too, but only on a line that uses no other separator — otherwise "$4,200" would split in two. Dollar and percent signs are ignored, so "$4,200" and "22.9%" both read fine, and lines starting with # are skipped.

What is the difference between avalanche and snowball?

Avalanche puts the extra money on the debt with the highest annual rate; snowball puts it on the one with the smallest balance. Avalanche spends less on interest, because it kills the most expensive balance first. Snowball clears individual debts sooner, which is why many people find it easier to keep going. This tool shows both with your numbers and the gap between them, and leaves the choice to you.

Which one should I use?

This tool does not say, and that is on purpose. It shows you what the difference costs in money and in months for your own debts. Often it is far smaller than people expect — and a plan you keep to for four years does more than a cheaper plan you stop after five months. Only you know which of those you are.

What does 'the minimum rolls' mean?

Your total each month stays the same. When a debt clears, its minimum is no longer being spent on it, so that money lands on the next target — which then clears faster, freeing more, and so on. That compounding is the whole mechanism, and it is simulated month by month here rather than approximated.

How is the interest calculated?

Monthly interest is balance × annual rate ÷ 12, rounded to the nearest cent with halves going away from zero. That exact rule is applied to every debt in every month in every strategy — if the strategies rounded differently, the comparison would be measuring the rounding instead of the strategies. Everything is held in whole cents, never in floating point.

What if I cannot cover all the minimums?

The tool says so plainly and stops. No payoff order fixes a shortfall against the minimums, and any schedule it printed would have to skip payments you have committed to, so the months and totals would be wrong from month one. That situation is worth taking to a non-profit debt advice service; they are free, they exist in most countries, and which one is right depends on where you live, so this tool does not name one.

What if a minimum is smaller than the interest?

Then that balance grows in every month it is not the target, and the output warns you which debt that is. If nothing clears within 1,200 months the run stops at that bound and says so, rather than reporting a payoff that never happens.

What does it assume?

That every rate is fixed, that you borrow nothing new, that you pay the same total every month on time, and that there are no fees, missed payments or penalty rates. Real life rarely provides any of that, so treat the months and totals as what these exact assumptions produce, not as a forecast.

Are the example numbers on this page typical?

No. They are invented so the page can show a working calculation. No rate, fee or minimum is built into this tool anywhere — replace every figure with the ones on your own statements.

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