Debt snowball vs avalanche: what the math actually says

If you have more than one debt and some money to put toward them beyond the minimums, you have to decide which debt gets the extra. The two best-known answers are the snowball and the avalanche.

The two methods

Both methods work the same way except for the order:

1. Pay the minimum on every debt.
2. Put every extra dollar toward one target debt.
3. When the target is paid off, add its minimum to the extra and move to the next debt. Your total monthly payment stays the same, so each payoff speeds up the next one.

The only difference is which debt comes first:

• Avalanche: the highest interest rate (APR) first.
• Snowball: the smallest balance first.

A worked example

Here are three debts, with $200 a month on top of the minimums. That's $600 a month in total.

Snowball goes after the medical bill first because it's the smallest. Avalanche goes after the credit card first because its rate is highest. Here's what happens, with interest charged monthly at each APR:

In this example, avalanche saves $301.14 in interest and finishes one month sooner. Compared with paying only the minimums, either plan saves $4,700 to $5,000 in interest and finishes more than four years sooner.

What the math says

Avalanche is built to pay the least interest. Each extra dollar goes to the debt that costs the most to carry. With the same monthly total, it usually pays less interest than snowball. When sorting your debts by balance and by rate gives the same order, the two plans are identical.

How much it matters depends on your debts. The gap grows when a large balance has a much higher rate than a small one. It shrinks when the rates are close together. In the example above it's about $10 a month over the life of the plan.

Snowball gets you a paid-off debt sooner. In the example, snowball clears a debt with the fifth payment. Avalanche takes 19 payments for its first payoff. Some people find that an early win helps them keep going. The math can't tell you whether that's true for you, but it can tell you what the win costs.

The biggest factor isn't the order. Going from minimums only to either plan saves far more than choosing between them. What matters most is paying extra every month and not adding new debt.

A warning about minimums

If a debt's minimum payment is less than a month of interest on it, the balance grows even though you pay every month. Check this for every debt. On minimum payments alone, a debt like that is never paid off.

Run your own numbers

The snowball vs avalanche calculator compares both orders and minimums only for your debts, free and with no sign-up. The debt-free date calculator shows how the extra amount changes your finish date.

In Pennykite, the debt payoff planner also puts each payment on your calendar on its due day, so your safe-to-spend number already accounts for it.

These are estimates, not financial advice. They assume interest is charged monthly at your APR and that minimums don't change. Lenders usually compound daily and may lower minimums as balances fall, so your statements will differ slightly.