Snowball vs avalanche
Both methods pay the minimum on every debt and put every extra dollar on one target debt. When a debt is paid off, its minimum rolls into the next target, so the payment "snowballs". The only difference is the order.
- Avalanche: target the highest interest rate first. It always costs the least interest.
- Snowball: target the smallest balance first. You clear whole debts sooner, which many people find keeps them going.
Example: a $5,000 credit card at 22.99% ($150 minimum), a $12,000 car loan at 6.9% ($300) and a $3,000 personal loan at 12% ($100), plus $200 extra, makes $750 a month. Both methods finish in 31 months. The avalanche costs $2,709.56 in interest and the snowball $3,025.09, so the avalanche saves $315.53. The snowball clears its first debt in month 11; the avalanche in month 17.
Which should you choose?
If the savings are small, as they often are, pick the one you'll stick with. If one debt has a much higher rate, like a credit card, the avalanche can save a lot. Either way, stop adding new debt while you pay off the old.
For a single card, try the credit card payoff calculator.
Frequently asked questions
Is the debt snowball or avalanche better?
The avalanche always costs the same or less interest. The snowball pays off individual debts sooner, which research suggests helps many people stay motivated. The best method is the one you'll follow.
What happens when I pay off a debt?
Keep paying the same total each month. The freed-up minimum moves to the next debt in line, which is what speeds up the plan.
Should I include my mortgage?
Usually not. Mortgages have low rates and long terms; most people pay off consumer debt first and keep the mortgage on schedule.
Was this calculator helpful?