How the calculator works
- Your debts: enter each one’s balance, interest rate and minimum payment. Add or remove debts as you need.
- Your budget: each month you pay all the minimums plus your extra amount. When a debt is cleared, its minimum goes to the next one.
- The order: avalanche pays the highest rate first, and snowball pays the smallest balance first.
Example
A credit card, a car loan and a personal loan, at typical US rates:
| Debt | Owed | Rate | Minimum |
|---|---|---|---|
| Credit card | $5,000 | 22.36% | $150 |
| Car loan | $12,000 | 7.54% | $300 |
| Personal loan | $4,000 | 11.90% | $130 |
Paying the $580 of minimums plus $200 extra, so $780 a month:
| Plan | Debt-free in | Total interest |
|---|---|---|
| Avalanche | 2 years, 7 months | $3,005 |
| Snowball | 2 years, 8 months | $3,371 |
| Minimums only | 4 years, 5 months | $5,545 |
When each debt is cleared:
| Debt | Avalanche | Snowball |
|---|---|---|
| Credit card | 1 year, 5 months | 1 year, 11 months |
| Car loan | 2 years, 7 months | 2 years, 8 months |
| Personal loan | 1 year, 10 months | 1 year, 1 month |
Avalanche clears the expensive credit card first, so less interest builds up. Snowball clears the smaller personal loan first, a quick win, then moves its payment onto the card. Here the gap is small; it grows when your biggest debt also has the highest rate.
What paying more saves
The same debts, highest rate first, with different amounts on top of the minimums:
| Extra a month | Debt-free in | Total interest | Saved on minimums only |
|---|---|---|---|
| None, minimums only | 4 years, 5 months | $5,545 | – |
| $100 | 3 years, 1 month | $3,765 | $1,781 |
| $200 | 2 years, 7 months | $3,005 | $2,540 |
| $400 | 2 years | $2,205 | $3,341 |
| $600 | 1 year, 8 months | $1,765 | $3,780 |
Most of the saving comes from two things: paying more than the minimums, and moving each cleared debt’s payment onto the next instead of spending it.
Avalanche or snowball?
- Avalanche saves the most interest. It suits you if you’ll stick to the plan without needing early wins.
- Snowball clears whole debts sooner, which frees up a payment and can keep you going. It usually costs only a little more.
- Either beats minimums only. Pick the one you’ll keep up.
Make the plan work
- Stop adding new debt while you pay it off.
- Keep a small emergency fund, so a surprise bill doesn’t go on a card. See emergency funds.
- Automate the payments, so the extra goes out each payday.
- Look for a lower rate: a 0% balance transfer or a cheaper personal loan cuts the interest, if the fees cost less than you save.
- Find the extra with the budget calculator.
For a single card, use the credit card payoff calculator. If you can’t keep up with the minimums, see help with debt.