How to Calculate Debt Snowball Payments and Compare Avalanche

 

The debt snowball method directs extra payment money toward the smallest debt while maintaining payments on the others. As a balance is cleared, its payment capacity moves to the next debt. The avalanche method uses a similar process but prioritizes the highest interest rate instead of the smallest starting balance.

The free Debt Snowball Calculator compares both strategies using the same fixed monthly budget. Enter balances, annual interest rates, minimum payments and an extra monthly amount to estimate payoff months and interest under its stated assumptions.

Build a consistent monthly budget

Add the entered minimum monthly payments, then add the extra monthly payment. This becomes the budget for both strategies. If two minimums are 50 and 60 and the extra amount is 100, the monthly budget is 210.

The calculator keeps that budget unchanged as debts are repaid. Minimum payments are fixed amounts entered by you, rather than percentages recalculated from each new balance. Actual account requirements may differ, so check statements before applying the plan.

Understand the priority order

Snowball prioritizes the smallest starting balance, then moves through the remaining debts in that original order. It does not reorder balances every month. Avalanche prioritizes the highest annual rate; equal rates use the smaller starting balance, then entry order.

Each month, the model adds interest, pays up to the entered minimum on every active debt, and allocates the remaining budget in strategy order. Payments cannot exceed the balance due. Unused payment capacity can reach another debt in the same month.

Enter a two-debt example

For Debt 1, enter Balance 1000, Annual interest rate (%) 0 and Minimum monthly payment 50. For Debt 2, enter Balance 2000, Annual interest rate (%) 24 and Minimum monthly payment 60.

Enter Extra monthly payment 100 and select Compare repayment plans. The starting debt is 3000.00 and the fixed monthly budget is 210.00. Optional debt names help identify the rows in the results.

Compare payoff time and interest

Under these assumptions, snowball clears Debt 1 in month 7 and finishes both debts in 17 months. Total interest is 466.38, and total paid is 3466.38.

Avalanche targets the 24% debt first. It clears that debt in month 15 and finishes both debts in 16 months. Total interest is 324.80, and total paid is 3324.80. Avalanche therefore has 141.58 less modeled interest in this example.

These figures describe this specific input set and model. They do not predict adherence to a repayment strategy or establish that every account follows the same interest and payment rules.

Check the monthly interest assumptions

Monthly interest is remaining balance x (annual rate / 100) / 12, rounded half up to the nearest cent. Interest is added before payments. The final month's actual payment can be lower than the budget because there may be less debt left to repay.

The estimate excludes daily accrual, changing rates, promotional expirations, fees, new purchases and missed payments. A card issuer's changing minimum-payment formula is not reproduced. Use the comparison as a planning scenario rather than an exact account statement.

Recognize incomplete plans

The model stops after 600 months. If debt remains, the result explicitly says the plan is not repaid within that horizon and shows the remaining balance. Interest accrued over those months is not presented as a complete lifetime interest cost.

A minimum below monthly interest can allow a balance to grow while another debt is targeted. Extra payments or rolled payments may later offset that growth, but some budgets will not clear all debt within the horizon. Review the assumptions rather than treating an incomplete plan as a payoff date.

Choose the appropriate comparison

Snowball emphasizes clearing smaller starting balances, while avalanche emphasizes higher rates. Both require a realistic budget and consistent payments. For an extra-payment scenario involving one automobile loan, use the Car Loan Payoff Calculator. Keep account-specific terms and any special repayment arrangements in view when interpreting either estimate.