Debt snowball vs avalanche: which saves more? A worked example

The debt avalanche saves more money. In our four-debt example, it costs about $505 less in interest than the debt snowball, with both finished in 26 months. The snowball, though, pays off your first debt sooner, which many people find motivating. Try your own debts in our debt snowball vs avalanche calculator.

Below is how each method works, a month-by-month simulation of both, and how to decide.

How each method works

Both methods follow the same basic routine:

1. Pay the minimum on every debt.
2. Put every extra dollar toward one target debt.
3. When the target is paid off, roll its payment into the next target.

The only difference is the order.

• Debt snowball: target the smallest balance first, regardless of rate.
• Debt avalanche: target the highest interest rate first, regardless of balance.

Because your total monthly payment stays the same, the rollover makes each new target fall faster than the last.

The example: four debts, $990 a month

Here's a common mix of debts. The total is $22,000, and the minimums add up to $690 a month. You budget an extra $300, for $990 a month in total.

Debt	Balance	APR	Minimum payment
Store card	$1,200	18.99%	$40
Visa card	$6,800	24.99%	$205
Personal loan	$4,500	12.50%	$150
Car loan	$9,500	6.90%	$295
Total	$22,000		$690

The snowball order is store card, personal loan, Visa, car loan (smallest to largest). The avalanche order is Visa, store card, personal loan, car loan (highest rate to lowest).

We simulated both month by month. Each month, interest is added to every balance, minimums are paid, and the rest goes to the target debt.

Results: snowball vs avalanche

Plan	Months to debt-free	Total interest	Total paid
Minimums only ($690/mo)	57	$7,274	$29,274
Snowball ($990/mo)	26	$3,678	$25,678
Avalanche ($990/mo)	26	$3,174	$25,174

Both methods beat paying minimums by a wide margin. The snowball saves about $3,596 in interest compared with minimums. The avalanche saves about $4,101.

The avalanche comes out $505 ahead of the snowball. Both finish in the same month here because the last debt in both plans is the car loan.

When each debt gets paid off

Debt	Snowball payoff month	Avalanche payoff month
Store card	Month 4	Month 18
Personal loan	Month 13	Month 22
Visa card	Month 22	Month 16
Car loan	Month 26	Month 26

This table shows the real trade-off. With the snowball, you clear your first debt in four months and your second in 13. With the avalanche, you wait 16 months for your first payoff, but the expensive Visa balance is gone six months sooner.

At 24.99%, the Visa card was charging about $142 a month in interest at the start. The store card was charging about $19. Attacking the Visa first is where the avalanche's savings come from.

How the extra payment changes the gap

The more extra money you put in, the faster both plans finish, and the smaller the gap gets in dollars.

Extra per month	Snowball interest	Avalanche interest	Avalanche saves
$100	$5,475 (35 months)	$4,790 (34 months)	$685
$300	$3,678 (26 months)	$3,174 (26 months)	$505
$600	$2,573 (20 months)	$2,194 (19 months)	$379

With only $100 extra, the gap is bigger because high-rate balances sit around longer. Either way, the size of your extra payment matters far more than which method you pick. Going from $100 to $600 extra saves around $2,600 to $2,900 in interest under either method.

Which method should you choose?

The avalanche is the cheaper choice on paper. The snowball may be the better choice for some people in practice. Here's a simple way to decide.

The avalanche may suit you if:

• Your highest-rate debt isn't much bigger than the others.
• You're motivated by the total interest saved, not by closing accounts.
• The rate gap between your debts is large (for example, 25% vs 7%).

The snowball may suit you if:

• You've tried and stalled before, and early wins would help.
• You have several small balances you could clear within a few months.
• Your rates are close together, so the cost difference is small.

There's also a middle path. Some people knock out one or two tiny balances first for a quick win, then switch to the avalanche.

How to set up your own plan

You can run either method in about 15 minutes.

1. List every debt. Write down the balance, APR and minimum payment for each. Your latest statements have all three.
2. Pick a monthly budget. Add up the minimums, then decide how much extra you can pay. Even $50 helps.
3. Choose an order. Sort by balance for the snowball or by APR for the avalanche.
4. Automate the minimums. Set autopay on every account so you never miss one.
5. Send the extra to the target. Make one extra payment each month to the debt at the top of your list.
6. Roll it forward. When a debt is paid off, add its full payment to the next target.

Check in every few months. If a rate changes or you get a raise, update the plan.

Ways to make either method cheaper

• Lower the rates. A balance transfer or personal loan can shrink the interest on your highest-rate debts.
• Keep the total payment fixed. When a minimum drops or a debt ends, don't spend the difference. Roll it forward.
• Stop new borrowing. New charges push every payoff date back.
• Add windfalls to the target. A tax refund or bonus can move your debt-free date by months.

The CFPB has free tools and guidance on managing debt if you want more help.

Bottom line

If you make the same total payment either way, the debt avalanche saves more interest. In our example it was about $505. The snowball gets you quicker early wins. The best plan is the one you'll stick with, and the biggest savings come from paying more each month.

Enter your own balances, rates and budget in the debt snowball vs avalanche calculator to see your exact payoff dates under both methods. For a single card, the credit card payoff calculator is a faster fit.