How to Use This Tool
Follow these steps to compare debt repayment strategies:
- Enter any extra monthly payment you can allocate to debt repayment beyond minimums.
- Add up to 3 debts with their current balance, APR interest rate, and required minimum payment.
- Select whether you want payoff timelines displayed in months or years.
- Click Calculate to see detailed breakdowns for both Snowball and Avalanche methods.
- Use the Copy button to save results to your clipboard for reference.
Formula and Logic
The calculator simulates monthly repayment for both strategies using these core rules:
- Debt Snowball sorts debts by balance from smallest to largest, applying all available extra payments to the smallest debt first.
- Debt Avalanche sorts debts by interest rate from highest to lowest, applying extra payments to the highest-interest debt first.
- Monthly interest is calculated as (Annual Interest Rate / 100) / 12 * current balance, added to the balance at the start of each month.
- Minimum payments are applied to all debts first each month, with paid-off debts' minimum payments added to the extra payment pool for subsequent months.
- Simulations run until all debts are paid off or 50 years (600 months) have passed.
Practical Notes
Keep these finance-specific tips in mind when using this tool:
- Interest rates are assumed to be fixed APR, compounded monthly. Variable rates may change the results over time.
- Minimum payments are assumed to stay constant, but some lenders adjust minimums as balances drop.
- The Snowball method offers quicker small wins, which can help maintain motivation for long-term repayment.
- The Avalanche method always minimizes total interest paid, saving the most money over time.
- Consider tax-deductible debts (like some student loans or mortgages) separately, as their effective interest rate is lower after tax benefits.
Why This Tool Is Useful
This calculator helps you make informed decisions about debt repayment:
- Quantifies exactly how much you can save by choosing Avalanche over Snowball (or vice versa).
- Shows clear payoff timelines to help you align repayment with financial goals like buying a home or retiring.
- Accounts for extra payments and paid-off debt minimums to reflect real-world repayment behavior.
- Visual progress bars and copy functionality make it easy to share and track results.
Frequently Asked Questions
Which method should I choose?
Choose Snowball if you need quick wins to stay motivated, or Avalanche if minimizing total interest paid is your top priority. If the interest savings are small, Snowball may be better for behavioral reasons.
Does this account for compounding interest?
Yes, the calculator applies monthly compounding interest for all debts, which is standard for most credit cards, personal loans, and auto loans.
What if my interest rates change?
This tool assumes fixed interest rates. For variable-rate debts, rerun the calculation with updated rates when they change to keep results accurate.
Additional Guidance
Pair this calculator with a monthly budget to ensure your extra payment amount is sustainable. Review your debt terms annually to check for lower interest rate refinance options, which can reduce your total repayment costs further. If you have high-interest debt like credit cards, prioritize paying those off first even if using the Snowball method for other debts.