Guide

Debt snowball vs. avalanche: what the difference costs

Both methods pay every minimum and put all the extra money on one debt. They only differ on which debt gets the extra. Snowball picks the smallest balance. Avalanche picks the highest interest rate.

The example (assumptions, not your numbers)
DebtBalanceAPRMinimum
Store card$90018%$35/mo
Credit card$4,50027%$110/mo
Car loan$9,0007%$260/mo

Plus $200 a month on top of the minimums. Minimums held fixed, interest charged monthly at APR ÷ 12, no new charges. Figures below are the planner’s own math on these numbers, rounded to the dollar. Minimums only means paying each debt just its own minimum, nothing extra; when one is paid off, its minimum stops instead of moving to the next debt.

The same debts, run both ways

  • Snowball: debt-free in 2 yr 4 mo, about $2,229 in interest. First debt gone: Store card in month 4.
  • Avalanche: debt-free in 2 yr 4 mo, about $2,123 in interest. First debt gone: Credit card in month 18.

In this example avalanche saves about $106 in interest. Snowball gets you a paid-off account sooner. How big the gap is depends on how far apart your rates are. When your smallest debt also has the highest rate, the two plans are identical.

Which one to pick

Pick avalanche if you’ll stick with the plan no matter what and want the lowest total cost.

Pick snowball if you’ve started plans before and stalled. Closing an account early is something you can see, and research on real repayment behavior has found people who clear small balances first are more likely to keep going.

Either way, the plan you keep beats the plan that’s cheaper on paper. The planner shows both (and a third, cash-flow, which frees up minimums fastest) on your own numbers.

Compare both on this example

Opens the free planner with this example already typed in. Swap in your own balances, rates and minimums. No signup, no bank connection, and your numbers stay in your browser.

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