Debt Payoff Calculator

How the avalanche and snowball methods work

Both methods make the same minimum payments on every debt each month. The difference is where any extra payment goes. The avalanche method directs extra funds to the debt with the highest APR, which mathematically minimises total interest paid. The snowball method directs extra funds to the debt with the smallest remaining balance, which eliminates individual debts faster and provides a psychological boost from clearing accounts sooner.

Once a debt is fully paid off under either method, its freed-up minimum payment rolls into the next target debt, creating a growing payment that accelerates the remaining payoff. This cascading effect is why both methods are sometimes called the debt snowball or debt avalanche — the payment grows as debts disappear.

Core formulas used in this calculator

The calculator uses a month-by-month simulation that applies interest, distributes minimum payments, and then allocates extra funds according to the chosen method. It runs both strategies in parallel so you can compare outcomes.

Worked example: three debts with extra payment

Suppose you have a credit card with a 5,000 balance at 22% APR (100 minimum), a car loan with 10,000 at 6% (200 minimum), and a student loan with 3,000 at 5% (50 minimum), plus 100 extra per month. The avalanche method would direct the extra 100 to the credit card first because it has the highest rate, saving the most interest overall. The snowball method would direct it to the student loan first because it has the smallest balance, clearing that account in roughly 25 months for a quick psychological win.

In this scenario, the avalanche method typically saves several hundred in total interest and finishes a few months sooner. But the snowball method eliminates the first debt earlier, which some people find more motivating. The calculator shows both side by side so you can decide which trade-off suits your situation.

Limitations of this estimate

This calculator assumes fixed APRs, consistent monthly payments, and no new charges added to any balance. Real-world debts may have variable rates, promotional periods, balance transfer fees, penalty APRs, or issuer-specific payment allocation rules that differ from this model. It also does not account for changes in income, unexpected expenses, or tax implications of debt repayment strategies.

Use this tool for planning and method comparison, not as a substitute for personalised financial advice. If you are struggling with debt, consider speaking to a non-profit credit counselling service for guidance tailored to your situation.