Debt snowball calculator

What these numbers mean

Both columns describe the same debts, the same monthly outlay and the same rules. The only difference is which debt gets the leftover money after every minimum is paid.

The avalanche always costs less interest. That is arithmetic, not a view: paying down the highest rate first minimises the interest accruing against you. If total cost is the only thing you care about, the avalanche wins every time and the size of the win is in the figures above.

The snowball clears individual debts sooner. That is also real. A debt gone is one fewer statement, one fewer minimum, and one fewer thing to track. Whether that is worth the extra interest depends on whether you will still be doing this in a year, which is a question about you and not about the money.

This page does not choose. It shows what each costs so you can.

How this is calculated

Each month, in this order:

• Interest is added to every open debt, at its own rate divided by 12.
• Every debt except the target receives its minimum payment.
• Everything left of your monthly budget goes to the target debt.
• When a debt clears, its minimum is freed and becomes part of what goes to the next target. Your total monthly outlay never changes.

The target is the smallest remaining balance under the snowball, and the highest rate under the avalanche. Interest and payments are rounded to whole cents as they are applied, so the schedule adds up to the totals.

The rolling minimum is the mechanism that makes either method work, and it is the part most explanations skip. Nothing about the ordering creates money; it changes only which balance the extra payment is reducing.

Method follows the Consumer Financial Protection Bureau's guidance on paying down multiple debts and the interest disclosure rules in Regulation Z, 12 CFR 1026.

What this does not account for

• Minimums that change. Card minimums are usually a percentage of the balance, so they fall as you pay down. This holds each minimum at what you entered, which is the conservative direction: your real minimums will drift lower.
• New borrowing. Anything added to these balances lengthens the plan.
• Fees and penalty rates. Late fees, annual fees and the penalty APR a missed payment can trigger are all excluded.
• Variable rates. Most cards track the prime rate. This models one rate per debt throughout.
• Promotional rates ending, and balance transfer fees, which can change the ordering entirely.
• Everything that is not arithmetic. An emergency fund, an employer match you might be giving up, and how secure your income is all bear on whether this plan is the right use of the money. None of it is here.

Questions

What is the difference between the snowball and the avalanche?

Only the order you attack the debts in. Both pay every minimum every month and put whatever is left over onto one target debt. The snowball targets the smallest balance, the avalanche targets the highest interest rate. When a debt clears, its minimum rolls into the target payment, which is why either method accelerates as it goes.

Which one should I use?

This page will not tell you. The avalanche always costs less interest, which is arithmetic rather than opinion. The snowball clears individual debts sooner, and for some people that matters more than the money because it is the difference between continuing and giving up. Both totals are shown above. The choice depends on things a calculator cannot see.

Why does the total payment stay the same but the payoff speed up?

Because when a debt clears, its minimum payment does not disappear from your budget: it rolls onto the next debt. Your monthly outlay stays flat while the amount actually reducing principal grows every time a debt is cleared. That rolling effect is the whole mechanism, and it is why both methods work.

Should I include my mortgage?

Usually not. A mortgage is normally the lowest rate you have and the largest balance, so it sits last under either method and simply makes the numbers harder to read. Include it if you genuinely intend to attack it in the same plan.

What if I cannot cover all the minimums?

This calculator will say so rather than produce a plan, because a payoff schedule that assumes you skip minimums is not a plan. Missed payments trigger late fees and often a penalty interest rate, which changes the arithmetic sharply. That situation needs a conversation with your creditors or a non-profit credit counsellor, not a calculator.