Debt Avalanche vs Snowball Calculator – Which Saves More?

Introduction

The two titans of debt repayment: Snowball (psychological) vs. Avalanche (mathematical). Which one gets you debt-free faster?

The Debt Payoff Calculator below helps you compare the exact difference in time and interest.

The Comparison

Calculation Example

Debts:

1. Credit Card A: @ 25% (Min: )
2. Credit Card B: ,000 @ 18% (Min: )
3. Student Loan: ,000 @ 6% (Min: )

Extra Cash: /month

Scenario A: Snowball (Smallest Balance First)

1. Target: Credit Card A ()
2. Pay /month ( min + extra)
3. Paid off in ~2.5 months.
4. Roll + = to Credit Card B.

Scenario B: Avalanche (Highest Rate First)

1. Target: Credit Card A ( @ 25%) - Coincidentally also the highest rate! Let's change the example: Suppose Card B was @ 18% and Card A was @ 25%.
   • Snowball: Pay Card B () first.
   • Avalanche: Pay Card A () first because 25% > 18%.

How Much Do You Save?

Typically, Avalanche saves 3-5% more in interest and finishes 1-3 months earlier on a 3-year plan.

Is it worth it?

• If the difference is only over 3 years, do Snowball for the motivation.
• If the difference is ,000, do Avalanche for the savings.

Step-by-Step Guide

1. List all debts (Balance, Rate, Min Payment).
2. Determine extra monthly budget (e.g., ).
3. Pay minimums on EVERYTHING except one target debt.
4. Attack the target with the extra .
5. Repeat: When target is gone, roll its payment into the next target.

FAQ

Q: Can I switch methods? A: Yes! Start with Snowball to clear a few small annoyances, then switch to Avalanche for the big, high-interest loans.

Q: Does this work for mortgages? A: Mathematically yes, but usually better to focus on high-interest consumer debt (credit cards) first.

Q: What if rates are similar? A: If rates are within 1-2%, just use Snowball. The psychological benefit outweighs the pennies saved.