🏔 Debt avalanche or snowball?
👋 Overview
Deciding how to tackle multiple debts usually comes down to two strategies: the highest interest rate method (avalanche) or the snowball method. This calculator compares both paths side-by-side using your actual balances. You will see exactly how much time and money you can save mathematically, and whether those savings are worth giving up the motivational boost of quick wins.
💳 High-Rate Debt
The CFPB notes that the highest interest rate method eliminates your costliest debts first, which can save you money in the long run. By attacking your most expensive balance, you reduce the total interest that accrues each month.
To see this in action, enter your most expensive debt here. For most people, this is a credit card with an APR of 20% or more.
🚗 Largest Balance
Enter your largest debt here, such as an auto loan or personal loan. Because of its size, this debt usually takes the longest to eliminate under either strategy.
This calculator simplifies away a few real-world variables to make the comparison clear: it assumes fixed APRs, a constant monthly payoff budget, a stylized 2% minimum payment on all non-target debts, and no new charges.
🎓 Smallest Balance
The CFPB explains that with the snowball method, you see progress quickly as you pay off smaller debts but may end up paying more in the long run. By wiping out a small balance entirely, you free up its minimum payment to roll into the next target.
Enter your smallest balance here to see how fast you could score your first victory.
💵 Monthly Budget
Your total monthly payoff budget must cover the minimum payments for all your debts, with enough left over to attack the target debt. If your budget does not even cover the first month's minimums plus interest, your balances will never shrink.
The CFPB frames the choice by motivation: pick the highest-rate method if you are motivated by saving the most money, and the snowball method if you are motivated by seeing progress quickly.
🔗 See Also
For further related reading, check out:
Last updated by heyfinfam (v26.7.0) · View history
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Disclaimer: This content and any calculations provided are for informational purposes only. The views, calculations, and methodologies expressed are those of the author and do not necessarily reflect those of this platform. Not financial advice. Users are solely responsible for any decisions made based on this information.
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