Debt Payoff Calculator: Snowball vs Avalanche Plan

A debt payoff plan pays the minimum on every debt and sends all extra money to one target debt at a time. The debt avalanche targets the highest APR first and costs the least interest. The debt snowball targets the smallest balance first and clears your first debt sooner. Either way, when a debt is paid off its minimum rolls into the next one, so your total monthly payment stays the same. With three debts of $900, $5,400 and $8,000 and $150 extra a month, both methods finish in 29 months, the avalanche costs $78 less interest, and paying only the minimums would take 57 months and cost $2,450 to $2,530 more.

This page builds a plan across several debts. If you want the lifetime and opportunity cost of a single balance instead, use the real cost of debt calculator. For one loan's full month-by-month schedule, the amortized loan calculator is the better fit.

The calculator is for informational purposes only and gives estimates. Lenders round, date and apply payments in their own ways, so your statements will differ by a few dollars.

Debt snowball vs debt avalanche: what is the difference?

Both methods use the same monthly budget and the same rule: pay every minimum, then put everything left over on one debt. They differ only in which debt gets the extra.

The avalanche is the mathematically cheapest order because every extra dollar goes where it stops the most interest. The snowball gives up some of that saving in exchange for crossing a debt off sooner, and every account you close cuts down the bills you have to track. Neither method works if you keep adding new charges, so the real test is which one you will actually follow for the next two or three years. The calculator always shows both, so you can see the price of the snowball in dollars before you choose.

Worked example: three debts, $150 extra a month

The calculator opens with this example:

The monthly budget is $455 of minimums + $150 extra = $605. In month 1 the debts charge $194.83 of interest, so $605 − $194.83 = $410.17 goes to principal.

Snowball, month 1. Every debt gets its minimum and the $150 extra goes to the smallest balance, the store card: $900 + $13.50 − $35 − $150 = $728.50 left. The store card is gone in month 6. Its $35 minimum and the $150 extra then join the credit card's $160, so the card gets $345 a month and is cleared in month 23. From month 24 all $605 goes to the personal loan, which is paid off in month 29.

Avalanche, month 1. The extra goes to the highest rate, the 24% credit card: $5,400 + $108 − $160 − $150 = $5,198 left. The card is cleared in month 22. The store card, which has been shrinking on its $35 minimum, is finished in month 23, and the personal loan again in month 29.

The avalanche saves $77.64 here, and the snowball delivers its first payoff 16 months earlier. The gap stays small because the store card is small: moving $900 ahead of the card for a few months doesn't cost much. The gap grows when a large balance carries the highest rate and several small, low-rate debts sit in front of it in snowball order.

How much does the extra payment change?

Same three debts, different extra amounts. Minimums only: 57 months and $5,369 of interest.

The first row matters most. With no extra money at all, simply keeping the payment at $455 and rolling each freed minimum into the next debt cuts the payoff from 57 to 43 months and saves about $430 of interest. If you can only change one habit, that is the one.

How the calculator works

1. Interest. Each month every open balance is charged APR ÷ 12, rounded to the cent. Card issuers generally compute interest on the average daily balance, so real charges differ slightly from month to month.
2. Minimums. Every open debt receives its minimum payment, or the remaining balance if that is smaller.
3. Extra and rollover. The total you pay stays fixed at all the starting minimums plus your extra amount. Whatever is left after the minimums goes to the target debt: the smallest current balance for the snowball, the highest APR for the avalanche. If the target is paid off mid-month, the rest spills to the next target the same month.
4. Minimums-only baseline. Each debt gets only its own minimum, and nothing is redirected when a debt is paid off. The difference in interest between this and your plan is the "interest saved" figure.
5. Results. You get the debt-free month and date (month 1 is next month), total interest and total paid for both methods, the month each debt is cleared, and the order to pay them in.

Inputs to get right. Use the current balance and the purchase APR from your latest statement, not the promotional rate unless it lasts through your whole plan. For installment loans (car, personal, student) the minimum is the fixed monthly payment. For credit cards, use the minimum on your last statement: the tool holds it fixed, while the card's own minimum usually shrinks as you pay down the balance. That makes the real "minimums only" path slower and costlier than shown, so the savings figure is conservative.

What it leaves out. New purchases, annual fees, late fees, penalty APRs, promotional periods ending, and variable rates that move with the prime rate. If you expect a rate change, run the plan again when it happens.

Why paying only the credit card minimum takes so long

A card's minimum payment is designed to keep the account current, not to pay the debt off quickly. Since the Credit CARD Act of 2009, federal law has required every card statement to carry a "Minimum Payment Warning" with an estimate of how long you'll take to repay the balance with minimum payments only, the total cost, and the monthly payment that would pay it off in 36 months, along with what you would save at that payment (15 U.S.C. § 1637(b)(11); the details are in Regulation Z, 12 CFR § 1026.7(b)(12)). When minimum payments would never pay off the balance, the statement has to show a different warning that says so. Look for that box on your statement: it does the single-card math for you.

Here is the same math for a $5,400 balance at 24% APR, where interest is $5,400 × 2% = $108 in the first month:

A $110 payment covers $108 of interest and only $2 of principal at first, which is why it takes 203 months. Raising it by just $10 cuts the time almost in half. This is also why the calculator warns you when a minimum is at or below the month's interest: on that debt, the minimum alone never ends.

Which balance does an extra card payment pay down?

On a single card with several balances (purchases, a cash advance, a balance transfer), you don't choose. Regulation Z requires the issuer to apply any amount above the minimum to the balance with the highest APR first, then to the next highest (12 CFR § 1026.53(a)). The issuer decides how the minimum itself is applied. In practice, that means a card with a 0% transfer balance and new purchases sends your extra money to the purchases first. One exception: for a deferred-interest balance, extra payments go to that balance first during the last two billing cycles before the promotion ends.

Balance transfers and debt consolidation loans

Both tools can lower your interest rate. Neither one reduces what you owe, and both can backfire if the new terms are longer or new charges come back.

Balance transfer. You move a card balance to another card with a low introductory rate, usually for a fee charged as a percentage of the amount moved. Federal rules require a promotional rate to last at least six months (12 CFR § 1026.55(b)(1)), and the issuer can raise the rate if a minimum payment is more than 60 days late (§ 1026.55(b)(4)). Example with an assumed 3% fee and a 12-month 0% period: moving the $5,400 card costs $5,400 × 3% = $162, so you owe $5,562 and must pay $5,562 ÷ 12 = $463.50 a month to clear it before the promotion ends. Paying the same $463.50 on the original 24% card would take 14 months and cost $810 of interest, so the transfer saves about $810 − $162 = $648. That's only true if the balance is gone before the regular rate starts. Check the actual fee, the length of the promotion and the rate that follows it in the card's terms.

Consolidation loan. A fixed-rate personal loan pays off several debts and leaves one payment. The trap is the term. Consolidating all $14,300 from the example into a loan at an assumed 12% APR for 60 months gives a payment of $318.10 and $4,786 of total interest. That is a lower rate than two of the three debts, but it costs more than the avalanche's $2,840, because the payment drops from $605 to $318 and the debt lasts five years. Keep paying $605 a month into that same 12% loan and it is gone in 28 months with $2,096 of interest. Origination fees, which many lenders deduct from the loan amount, are not in these figures. If you consolidate, enter the new loan in the calculator as one debt and set the extra so your total payment doesn't fall.

Where student loans fit in a debt payoff plan

Student loans usually belong near the end of an avalanche because their rates are often lower than card rates. There are two other reasons to slow down before prepaying federal loans:

• Repayment plan and forgiveness. Income-driven plans tie the payment to income and can forgive a remaining balance after a set number of years. If you expect forgiveness, extra payments may only reduce the amount forgiven. Model your plan options in the student loan calculator first, then put the required payment here as the loan's minimum.
• The interest deduction. You can deduct up to $2,500 of student loan interest a year. For 2026 the deduction phases out between $85,000 and $100,000 of modified AGI for single filers and between $175,000 and $205,000 for joint filers (Rev. Proc. 2025-32), and it isn't available if you're married filing separately. If all of your interest is deductible and you're in the 22% bracket, a 6% loan really costs you about 6% × (1 − 0.22) = 4.68% after tax. That pushes it even further down the avalanche list. Enter the actual APR in the calculator anyway, since the deduction only comes back when you file.

Should you pay off debt or invest?

Each extra dollar you put on a debt earns exactly that debt's interest rate, with no risk. A few rules decide most cases:

1. Keep a small cash buffer first. Without one, the next car repair goes back on a card at 24%. The guide to saving $10,000 in a year covers building that cushion while you carry card debt.
2. Take any employer retirement match. A match adds money you don't get any other way, so most plans put it ahead of extra debt payments.
3. Then go after high-rate debt. Paying off a 24% card is a guaranteed 24% return. Stock returns aren't guaranteed and are rarely that high, so card debt almost always comes first.
4. Low-rate debt is a judgment call. A 4% car loan or a mortgage costs less than many savings and investment options can earn, so paying it down early is mostly about peace of mind. Use the after-tax rate when the interest is deductible.

Paying debt down also frees up borrowing capacity. Lenders look at your debt-to-income ratio: total monthly debt payments divided by gross monthly income. Every debt you clear lowers that number. If a mortgage or car loan is next, the loan affordability calculator shows how much each cleared payment raises what you can borrow.

Taxes: forgiven or settled debt can be income

Paying off debt in full has no tax effect. Settling it for less does. If a creditor accepts $3,000 to settle a $5,000 balance, the $2,000 that is canceled is generally taxable income, and the lender may send you Form 1099-C. You have to report canceled debt even if no form arrives, unless an exclusion applies (IRS Publication 4681). The most common exclusion is insolvency: if your debts were more than your assets just before the cancellation, you can exclude canceled debt up to the amount you were insolvent by. You claim it on Form 982, line 1b.

For student loans, the temporary exclusion created by the American Rescue Plan Act covered discharges from 2021 through 2025. Discharges because of death or total and permanent disability have their own rule, and for discharges after 2025 it requires your Social Security number on the return (Publication 4681). If a settlement or forgiveness is part of your plan, set aside money for the tax.

Common mistakes that slow a debt payoff plan

• Letting the payment shrink. When a debt is paid off, its minimum has to move to the next debt. If it disappears into everyday spending, you are back on the minimums-only path.
• Using an old minimum. Card minimums change every month. Update the plan with new statements every few months.
• Ignoring promotional end dates. A 0% balance that isn't cleared in time goes to the regular rate. Put the post-promotion APR in the calculator to see the worst case.
• Closing cards with no plan for new charges. The plan assumes no new debt. If a card keeps getting used, add the new spending to its balance and run the plan again.
• Stretching the term to lower the payment. A lower payment over more months usually costs more interest, as the consolidation example shows.