How to use it· 4 steps
- Add each debt with its balance, APR and minimum monthly payment.
- Enter the extra amount you can pay each month on top of all the minimums.
- Compare the two plans: the debt-free date, total interest, interest saved and the order the debts are cleared.
- Follow one plan: pay every minimum, put the extra on the debt it names, and when a debt is cleared roll its payment onto the next.
Step by step
How to use the debt payoff calculator
- 1Add each debt with its balance, APR and minimum monthly payment.
- 2Enter the extra amount you can pay each month on top of all the minimums.
- 3Compare the two plans: the debt-free date, total interest, interest saved and the order the debts are cleared.
- 4Follow one plan: pay every minimum, put the extra on the debt it names, and when a debt is cleared roll its payment onto the next.
How both methods work
The snowball and the avalanche share the same mechanics and differ only in order. Each month you pay the minimum on every debt and put everything extra on one target debt. When the target is cleared, its minimum payment does not go back into your budget — it rolls onto the next target, along with the extra. Your total monthly payment stays exactly the same until the last debt is gone.
That rollover is where the acceleration comes from. Each cleared debt makes the payment on the next one bigger, so the later debts fall much faster than they would on their minimums alone.
The snowball, popularised by the personal-finance author Dave Ramsey, targets the smallest balance first and works up. The avalanche targets the highest interest rate first and works down. This calculator applies both rules to your debts, with ties broken by the other rule, and simulates every month until each debt is cleared.
The avalanche costs less — usually by less than people expect
Putting the extra money on the highest rate first minimises the interest you pay, because every dollar goes where it is costing the most. The calculator's starting example shows the size of the effect: a store card of $950 at 19.99%, a credit card of $4,800 at 27.99% and a personal loan of $3,200 at 12.99%, with $200 a month on top of $245 of minimums.
The avalanche clears all three in 25 months with $2,068 of interest. The snowball takes 27 months and $2,640. The avalanche saves about $572 — real money, but small next to what both methods save compared with paying only the minimums, which would take nearly ten years and cost more than $10,000 in interest at these rates.
The wider the spread between your rates, the more the avalanche saves. If your debts carry similar rates, the two methods come out almost identical, and the choice is about which one you will actually stick to.
The case for the snowball
The snowball's advantage is psychological, and it is not trivial. In the example, the snowball clears its first debt in month 5; the avalanche's first win comes in month 19. A closed account is visible progress, one fewer bill to track, and a reason to keep going.
There is research behind the intuition. A 2012 study in the Journal of Marketing Research by David Gal and Blakeley McShane, which examined consumer debt-settlement data, found that closing out individual debt accounts was associated with eventually eliminating debt overall, more than the size of the balances paid down.
A hybrid is perfectly reasonable: clear any tiny balances first for the quick wins, then switch to the avalanche for the rest. The method you finish beats the optimal method you abandon.
Rollover: why the monthly total must not drop
Both plans depend on keeping the total monthly payment fixed. Under the snowball in the example, the store card is cleared in month 5, and its $30 minimum joins the $200 extra on the personal loan. When that is cleared, the loan's $95 joins them on the credit card.
The temptation when a debt is gone is to treat its payment as money freed up. Doing so turns a snowball back into minimum payments on the remaining debts and gives back most of the time saved. The calculator states the monthly total for this reason: it is the number to automate.
One effect of the rollover can look odd in the payoff order. A debt with a large minimum relative to its balance — a car loan, typically — can clear itself on its own payments before the plan reaches it. The calculator lists debts in the order they are actually cleared and names the debt to target first.
Making the plan stick
Stop adding to the debts you are paying off, and keep a small emergency buffer so an unexpected bill does not go straight back on a card. Check whether a lower rate is available — a 0% balance transfer or a cheaper consolidation loan — but count the fees and make sure the new debt has a fixed end date.
The simulation charges interest at APR ÷ 12 each month and keeps every minimum at the amount you enter. Real card minimums fall as balances fall; keeping the payment fixed anyway is exactly what this plan asks of you. It assumes no new borrowing, fees or rate changes, and it is a planning tool rather than financial advice.
If the payments are not manageable at all, free help exists. In the US, nonprofit credit counselling agencies affiliated with the National Foundation for Credit Counseling offer debt management plans; in the UK, charities such as StepChange and the government-backed MoneyHelper service give free debt advice.
Answers
Frequently asked questions
Which is better, the debt snowball or the debt avalanche?
The avalanche always costs the same or less in interest. The snowball usually clears your first debt much sooner, which helps many people stay motivated. The calculator shows both for your debts, including exactly how much the avalanche saves.
What does rollover mean?
When a debt is paid off, its minimum payment is added to the payment on the next target instead of being spent. Your total monthly payment never drops, so each debt is cleared faster than the one before.
Should I include my mortgage or car loan?
Most people leave out the mortgage, which is usually low-rate and long-term. Car and student loans can be included; with large scheduled payments they may clear themselves before the plan targets them.
Why is a debt cleared before the plan reaches it?
Its own minimum payment was enough to pay it off first. That is common for instalment loans, whose payments are designed to clear them on a schedule.
What if my payments do not cover the interest?
The calculator says so and tells you how much more you need. Until the monthly total exceeds the interest the debts charge, the balances grow.
Is my debt information stored or shared?
No. It is calculated in your browser and never leaves your device.