Debt Payoff Calculator

What the two methods actually do

Both pay every minimum every month and throw all spare money at one target debt. Avalanche targets the highest interest rate, which mathematically minimises total interest. Snowball targets the smallest balance, which clears individual debts fastest. When one is cleared, its payment rolls into the next — that rolling is where the name snowball comes from, and both methods do it.

The trade-off is usually smaller than the argument about it

For most real debt sets the interest difference is a few hundred dollars, not thousands. That matters, and it also matters that people who see a balance disappear tend to keep going. If the avalanche saving is large, take it. If it is small and you have abandoned payoff plans before, the snowball's early win may be worth more than the difference — a plan followed beats an optimal plan abandoned.

Minimum payments are designed to keep you paying

Credit card minimums are typically 1 to 3 per cent of the balance, which falls as the balance falls, stretching repayment for decades and maximising interest. The “minimums only” figures above show what that path costs. Any fixed payment above the minimum breaks the pattern, which is why the extra payment has such a disproportionate effect.

Frequently Asked Questions