MinuteMetric

Snowball vs. Avalanche: Two Ways to Clear Debt

When you owe money on several accounts at once, you have to make a decision every month: after covering the minimum payment on everything, where does any spare money go? The two best-known strategies answer that question differently, and the gap between them is smaller than people expect — but it isn't zero.

The Debt Avalanche

Put every spare pound or dollar toward the debt with the highest interest rate, while paying minimums on the rest. When it's cleared, roll that entire payment into the next-highest rate, and so on. This is mathematically optimal: it always produces the lowest total interest and the fastest payoff date, because you're attacking the debt that's growing fastest.

The Debt Snowball

Put every spare payment toward the smallest balance regardless of its interest rate. When it's gone, roll that payment into the next-smallest. This costs slightly more in interest, but it clears individual accounts quickly, and each account that disappears is a visible win. For a lot of people that momentum is what keeps the plan alive past month three — and a plan you actually finish beats a marginally cheaper one you abandon.

Which Should You Choose?

Run both in this calculator with your real numbers and compare the totals. If avalanche saves you a trivial amount, take the snowball and enjoy the psychological boost. If it saves a substantial sum — which tends to happen when one debt carries a very high rate, such as a credit card at 20%+ alongside a low-rate loan — the avalanche is worth the discipline. A reasonable hybrid is to knock out one small balance first for morale, then switch to strict avalanche order.

How to Use This Calculator

1. Pick a method: Snowball or avalanche. The calculator orders your debts accordingly.
2. Enter each debt: Name it if you like, then add the current balance, the annual interest rate (APR), and the minimum monthly payment. Use "Add Another Debt" for each additional account.
3. Add any extra payment: This is the amount above the total minimums that you can commit each month. It's the single biggest lever in the whole calculation.
4. Calculate: You'll see how long the plan takes, the total interest you'll pay, and the total amount paid overall.

Where to Find Your Numbers

Your statement or online account shows all three inputs. The interest rate you want is the annual percentage rate; if your statement quotes a monthly rate, multiply it by 12. Minimum payments on credit cards are often calculated as a percentage of the balance, so they fall as the balance drops — this calculator uses the figure you enter throughout, which is a slightly conservative and generally safer assumption.

Why Extra Payments Matter So Much

Interest is charged on what you still owe, so every extra payment does double duty: it reduces the balance, and it reduces all the future interest that balance would have generated. This is why paying an additional modest amount each month often cuts years off a repayment schedule rather than months.

The mechanism the calculator models is the "rollover". When one debt is cleared, its payment doesn't go back into your spending — it's added to the payment on the next debt. Your total monthly outlay stays flat while the amount attacking the principal grows every time an account closes. That compounding in your favour is what makes the back end of a payoff plan move so much faster than the beginning.

Making the Plan Work

• Always cover every minimum. Missing a minimum triggers fees and can damage your credit, wiping out any gain from paying extra elsewhere.
• Stop adding to the pile. A payoff plan doesn't work if the balance is being topped up. Consider putting the cards away entirely while you're clearing them.
• Watch for promotional rates ending. A 0% balance transfer that reverts to 22% can reorder your priorities overnight. Note the expiry dates.
• Keep a small emergency buffer. Throwing every last pound at debt feels efficient until an unexpected bill puts it straight back on a credit card. A modest cash cushion protects the plan.
• Ask about a lower rate. A phone call to request a rate reduction, or a consolidation loan at a better rate, can save more than months of extra payments. It costs nothing to ask.
• Re-run the numbers periodically. Rates change, income changes, and seeing the payoff date move closer is its own motivation.

What This Calculator Doesn't Model

It assumes fixed interest rates, fixed minimum payments, no new borrowing, no fees, and payments made on time every month. Real accounts can have variable rates, minimums that shrink as the balance falls, annual fees, and promotional periods. Treat the output as a well-informed projection for comparing strategies, not an exact schedule.