How the two methods work
Both methods pay the minimum on every debt each month, then put everything left over on one target debt. When a debt is paid off, its minimum isn't spent elsewhere: it rolls onto the next target. So your total monthly payment stays the same until you're debt-free.
- Avalanche: target the highest APR first. This always costs the least interest, or ties.
- Snowball: target the smallest balance first. You clear whole debts sooner, which many people find keeps them going.
Each month: interest on each debt = balance × APR ÷ 12
Pay every minimum, then (minimums of paid-off debts + extra) goes to the target
Pay every minimum, then (minimums of paid-off debts + extra) goes to the target
Worked example
The starting numbers above are four debts: a Visa card ($6,000 at 24.99%), a car loan ($12,000 at 7.9%), a store card ($900 at 28.99%) and a medical bill ($1,500 at 0%), with $615 of minimums plus $300 extra, so $915 a month.
- Avalanche (store card → Visa → car → medical): debt-free in 26 months, $2,566.72 of interest.
- Snowball (store card → medical → Visa → car): also 26 months, but $2,886.56 of interest.
- Paying just the minimums with no rollover would take 58 months and $6,515.09 of interest.
The avalanche saves $319.84 here. The snowball wipes out the medical bill in month 7 rather than month 26, which some people find worth the extra cost.
Limitations
- Interest is estimated monthly at APR ÷ 12. Cards that charge daily interest come out slightly higher.
- Minimum payments are held fixed. Card minimums usually fall as the balance falls; holding them fixed is the plan most payoff guides recommend.
- It assumes no new charges, fees, or rate changes. Promotional 0% rates that expire will change the answer.
- The simulation stops at 50 years. If the payments don't cover the interest, it tells you instead of guessing.