Debt Snowball vs. Debt Avalanche
If you're staring at a mountain of credit card debt, student loans, or medical bills, you've likely heard of the two most popular payoff strategies. But which one actually works? Our calculator runs month-by-month simulations to show you the exact date you'll be debt-free using both methods.
The Debt Snowball: The Psychological Sprint
Popularized by Dave Ramsey, the Debt Snowball focuses on momentum and quick wins. You pay off your smallest balance first, regardless of the interest rate.
The Debt Avalanche: The Mathematical Marathon
The Debt Avalanche method targets the debt with the highest interest rate first. It's mathematically optimized to minimize the total amount of interest you pay.
Snowball vs. Avalanche: The Showdown
Here's a real-world comparison of what these strategies look like in practice:
| Feature | Debt Snowball | Debt Avalanche |
|---|---|---|
| Primary Focus | Smallest Balance First | Highest Interest Rate First |
| Main Benefit | Quick psychological wins | Maximum interest savings |
| Total Cost | Usually higher (more interest) | Lowest possible total cost |
| Time to Finish | May take longer | Mathematically fastest |
| Motivation Level | High (frequent wins) | Moderate (longer first debt) |
| Best If... | You have many small debts | You have high-interest cards |
| Typical Savings Difference | - | +$1,000-$5,000+ in interest |
When to Use Each Strategy
The "best" strategy is the one you actually stick with. Here's how to decide:
Real-World Scenario Comparison
Let's say you have three debts and $500/month extra cash after minimums. Here's how the strategies differ:
The Impact of High-Interest Credit Cards
Where Avalanche truly shines is with multiple high-interest debts. Credit card interest at 18-25% APR can destroy your finances.
Snowball vs. Avalanche FAQ
Q:Is the Debt Avalanche always better?
Mathematically, yes—it saves you the most money. However, if you have 10 different debts and use Avalanche on a massive $20,000 loan at 24%, you might lose motivation before you see any debt disappear. The 'best' method is the one you actually stick to. Many people find hybrid approaches (Snowball first, then Avalanche) work best.
Q:Can I switch between Snowball and Avalanche?
Absolutely! Many people start with the Snowball to clear 1-2 small 'annoyance' debts quickly (psychological boost), then switch to the Avalanche to tackle high-interest credit cards. This combines the motivation of quick wins with the math of interest savings.
Q:Does this calculator include my mortgage?
These strategies are typically reserved for non-mortgage consumer debt (credit cards, personal loans, car notes, student loans). Mortgages have much lower interest rates and huge balances, so they'd 'clog' your payoff strategy for years. Handle credit card debt first, then focus on mortgage optimization.
Q:What about medical debt or collections?
Include any debt in your calculator if it has a monthly minimum and interest rate. However, prioritize negotiating medical debt first—many hospitals offer payment plans with 0% interest. Collections should be handled carefully (consult a lawyer if unsure).
Q:How much 'extra cash' should I allocate?
Be honest about what you can afford above minimums. This might be $50/month, $500/month, or $0 if you're in survival mode. Even small extra payments dramatically shorten your timeline. If you're struggling, focus on increasing income or cutting expenses before choosing a strategy.
Q:What if I have a 0% APR promotional card?
With a 0% promotional rate (usually 6-21 months), that debt effectively has 0% interest during the promo. Prioritize paying off high-interest debt first. Once the promo expires, that card's rate becomes standard (usually 18-25%). Plan to pay off the 0% card before the promo ends.
Q:Does this calculator factor in rising minimum payments?
Our calculator uses fixed minimum payments (conservative estimate). In reality, some debts might have increasing minimums as you pay down the balance. Use our results as a baseline—the actual payoff might be slightly faster if minimums decrease.