Debt Snowball vs. Avalanche Payoff
Compare debt payoff strategies month-by-month to evaluate interest savings versus behavioral milestone frequency using empirical amortization simulations.
Your Debts & Credit Accounts (2)
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Extra dollars you can afford to pay toward debt each month
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Add balance, APR, and minimum payment for at least one debt account to view month-by-month payoff projections.
The Snowball Strategy: Debts are organized strictly from lowest balance to highest. You pay minimums across all accounts and channel your extra payment entirely into the smallest balance. Eliminating individual debts rapidly triggers psychological momentum.
The Avalanche Strategy: Debts are sorted strictly by annual interest rate (APR) from highest to lowest. You pay minimums on all accounts and channel extra funds into the most expensive loan. This mathematically minimizes the total dollar interest extracted by financial institutions.
The Snowball Rollover Effect: In both strategies, when an account is cleared, its minimum payment is not absorbed into personal spending—it permanently joins the extra payment pool to accelerate the next target account.
Calculation Methodology & Formula
Runs iterative month-by-month compound amortization. The Snowball method prioritizes lowest balance accounts to build psychological momentum, while the Avalanche method targets highest APR debts to minimize total interest paid.
Monthly Interest = Balance × (APR / 1200) | Cascade Payment = MinPayment_freed + ExtraPaymentWorked Example: 3-Account Credit Card & Loan Portfolio
Credit Card ($4,000 at 22.9% APR, $120 min), Car Loan ($9,000 at 7.5% APR, $220 min), Student Loan ($15,000 at 5.2% APR, $160 min), with $200 extra monthly payment.
Avalanche directs the $200 extra to the 22.9% card, eliminating the high-cost debt fastest. Snowball eliminates the lowest balance first to deliver an immediate psychological milestone.
Technical Constraints & Limitations
- Assumes interest rates remain fixed throughout the entire repayment timeline (does not model variable APR benchmarks).
- Assumes no new charges or balance transfers are added to any account during repayment.
- Excludes annual credit card membership fees, late penalty fees, or balance transfer transaction fees.