Compare the avalanche and snowball strategies and find the fastest, cheapest way to get out of debt.
Two payoff orders on the same set of debts. The avalanche puts every spare dollar against the highest interest rate first. The snowball puts it against the smallest balance first. Both pay the minimums on everything else, and both roll freed-up money into the next target. The calculator runs each order month by month and reports the finish date and the total interest paid.
The default debt set is deliberately ordinary: a $6,000 credit card at 22%, a $12,000 car loan at 7%, and an $8,000 student loan at 5%, with $520 of minimum payments and $200 of extra money each month.
APR is the annual rate stated on the statement. Dividing by twelve assumes monthly compounding, which is how most consumer debt is actually billed. The third line is the one that matters: when the payment is smaller than the monthly interest, the principal does not fall, and the balance grows. That is the definition of a minimum payment trap, and the calculator returns an error rather than a date when it detects it.
Take the credit card. $6,000 at 22% accrues $110 of interest in the first month. The $180 minimum payment covers that interest and $70 of principal, so the balance falls to $5,930. At that pace the card alone takes about 52 months to clear and costs roughly $3,360 in interest, more than half the original balance, for the privilege of paying on a schedule the issuer chose.
Now add the $200. The card gets $270 of principal in month one and the balance falls to $5,730 instead. That is 3.9 times the principal reduction in the same month, and the gap widens every month after it.
| Extra per month | Avalanche payoff | Total interest | Interest saved vs minimums |
|---|---|---|---|
| $0 | 8 yr 2 mo | $7,338 | — |
| $200 | 4 yr 10 mo | $4,167 | $3,171 |
| $500 | 3 yr 0 mo | $2,631 | $4,707 |
| $1,000 | 1 yr 11 mo | $1,696 | $5,642 |
The $200 case is the one worth studying. It removes three years and four months from the schedule and saves $3,171 of interest on a debt load of $26,000. The interest cost of doing nothing is 28% of the principal, and none of that money buys anything.
Doubling the extra payment to $500 does not double the benefit. It takes the schedule from 4 years 10 months to 3 years, which is another 22 months and $1,536 of interest. The returns on extra payments diminish because the high-rate balance is already gone by the time the larger payment has room to work. The first dollars are worth the most, which is an argument for starting with whatever you can find rather than waiting until you can afford the ideal number.
| Order | Payoff | Total interest |
|---|---|---|
| Avalanche (highest rate first) | 4 yr 10 mo | $4,167 |
| Snowball (smallest balance first) | 4 yr 4 mo | $4,224 |
The difference is $58 of interest over four and a half years, which is $1 a month. The reason is that on this particular debt set the two orders pick the same first target: the credit card has both the highest rate and the smallest balance. Avalanche and snowball diverge only when those two facts point at different accounts.
The snowball finishes six months sooner in month count while paying slightly more interest, because retiring a small balance frees its minimum payment earlier and the calculator lets the freed money move rather than holding the total outlay constant. That trade, faster visible progress for a small cash cost, is the honest summary of the snowball case. It is a behavior strategy and it works for people who quit when they cannot see progress.
When the rates are closer together, the difference between the two orders shrinks toward zero. When one rate is far above the rest, avalanche wins by a wide margin. A payday loan at 300% or a store card at 29% should always be first, regardless of balance.
Card issuers set minimums as a percentage of the balance, typically 1% to 3%, with a floor. That structure means the minimum falls as the balance falls, so the payoff date recedes as you approach it. On the default card, the $180 minimum covers $110 of interest. Raise the rate to 29% and the monthly interest becomes $145, leaving $35 of principal, and the same $180 minimum takes about 69 months instead of 52.
The practical response is to stop treating the minimum as a payment and start treating it as a fee for being in debt. Fix a number above it, automate it, and let the balance fall on a schedule you chose.
The effective rate, not the advertised rate. A card quoting 22% APR compounded daily has an effective annual rate of 24.6%. The difference is invisible on a statement and real in the payoff math.
The balance transfer fee. A 0% offer for 18 months usually charges 3% to 5% up front, and that fee is added to the balance. On $6,000 a 4% fee is $240, which is roughly seven months of the interest you were trying to avoid. It can still be worth it, and it should be compared against the interest saved over the promotional window rather than against zero.
Your credit utilization. Paying down a revolving balance lowers utilization, which usually improves a score within one or two billing cycles. That effect arrives before the debt is gone, and it is one of the few places where partial progress has an immediate payoff.
Paying off a 22% balance is a guaranteed 22% return, and no investment offers that with certainty. Paying off a 3% car loan is a guaranteed 3% return, which is below what a savings account has recently paid, so the ordering matters. Sort your debts by rate, compare the top rate against what the money would earn elsewhere, and put the extra payment where the spread is widest.
The credit card minimum payment calculator isolates one card and shows the cost of paying only the minimum. The mortgage payoff calculator applies the same logic to the largest loan most households carry, where the interest savings run into six figures. And the emergency fund calculator belongs in the same conversation, because paying down debt without a cash buffer is how people end up back on the card.
Order of attack is the whole question, and these three tools answer it from different angles. The minimum payment calculator prices the specific trap on revolving balances. The compound interest calculator shows the same mathematics working for you instead of against you. And once the balances are gone, the savings goal calculator is where the freed-up payment should go next. Before that first extra payment, though, the emergency fund guide explains why a cash buffer has to exist first, and what happens to the payoff plan when it does not.
It is better on total interest, always, by definition. Whether it is better overall depends on whether you finish. Studies of real borrowers have found that people who choose the snowball are more likely to stay with the plan, because closing an account produces a visible win. If your debt set has one rate far above the others, avalanche wins by enough to be worth the discipline.
Compare the guaranteed return of the payoff against the expected return of the investment, then adjust for risk. Debt at 22% should be retired before any investing beyond an employer match. Debt at 4% against a portfolio expected to return 7% is closer, and the answer depends on how much you value certainty. Paying a 4% loan early is a guaranteed 4%, and that is a respectable bond substitute.
Closing an account can lower the average age of your credit history and reduce available credit, both of which can nudge a score down. Paying the balance to zero while keeping the account open is the better sequence, because utilization falls and the history stays. The scoring effect of a lower utilization is usually larger and faster than the effect of a closed account.
Because some input combinations never pay off. If the total minimum payments barely cover the interest, the loop would run forever, so it stops at 1,200 months and reports that the budget does not cover the debt. In practice this means the payments are too small relative to the rates, and the fix is a larger payment or a balance settlement, not more time.
It can help when the new rate is meaningfully below the weighted average of the old rates and the term is not stretched so far that total interest rises. A 22% card rolled into an 11% personal loan saves real money if the balance is cleared in the same window. It backfires when the cards get run up again during the loan term, which is common enough that consolidation should come with a plan for the freed credit lines.
Usually yes, and you should confirm it. Federal student loans apply extra payments to interest first and then principal within the same loan group unless you specify otherwise. Mortgages typically apply extra to principal automatically, and some servicers require you to mark the payment as principal-only to avoid it being treated as an early installment. One phone call prevents months of misapplied money.
All calculation logic on this page is implemented from the primary documents below. Each one is listed with the figure it supplies, so any rate or threshold in the result can be traced back to its published source.
Same published formulas, same sourcing standard, one page each.