Debt Payoff Calculator: Avalanche vs Snowball

The calculator compares the two strategies the Consumer Financial Protection Bureau describes: the highest interest rate method, which pays off your costliest debt first, and the snowball method, where you keep making the minimum payments on all your debts, put any extra money toward the smallest one and then dedicate the freed-up money to the next smallest. Here the first is called avalanche.

Each month. Interest is added to every open balance. The minimum payment is then paid on every debt, and the rest of your monthly total (all minimums plus your extra amount) goes to the target debt. When a debt is paid off, its minimum payment is not dropped: it rolls into the next target, so your monthly total stays the same until everything is cleared.

Order. Avalanche targets the highest APR first (on a tie, the smaller balance). Snowball targets the smallest starting balance first (on a tie, the higher APR). The order is set from the figures you enter and does not change along the way.

Interest simplification. A card's APR is its interest rate stated as a yearly rate, so the calculator charges balance × APR ÷ 12 once a month. In reality, many credit card companies calculate interest daily, based on your average daily balance, so your statements may show slightly different amounts. The calculator also assumes your APRs and minimum payments stay as entered, that you make no new purchases and that no fees are added.

Limits. The schedule stops at 600 months (50 years). If your total monthly payment does not cover the interest added in the first month, no plan is shown, because the total balance would never go down.

If you are already behind. The Federal Trade Commission suggests that you call the creditors you owe money to before a debt collector gets involved and try to work out a new payment plan.