Avalanche method
The avalanche method directs your extra debt payment to the debt with the highest interest rate while maintaining the required payments on every other debt. After that debt is paid off, the extra payment moves to the remaining debt with the next-highest rate.
Why choose it: By attacking the most expensive debt first, the avalanche method generally reduces total debt faster and minimizes total interest.
Downside: The number of open debts—and the number of required payments pulling from your monthly cash flow—may remain higher for longer. If the highest-rate debt has a large balance, progress can feel slow even while your total balance and future interest are falling faster. Measure progress by total debt reduced, not only by accounts closed.
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Snowball method
The snowball method directs your extra debt payment to the debt with the smallest balance while maintaining the required payments on every other debt. After that debt is paid off, the extra payment moves to the remaining debt with the next-smallest balance.
Why choose it: Clearing smaller debts early can reduce the number of open accounts and required monthly payments, creating visible wins that help sustain motivation.
Downside: Because interest rates do not determine the order, the snowball method may cost more in total interest. It can also encourage the misleading idea that every dollar of debt is equally costly: a dollar carried at 25% APR does more financial damage than a dollar carried at 4.99% APR.
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Debt avalanche vs. debt snowball example
Consider four debts and assume you make every required payment plus $500 of extra debt payments each month. The card and HELOC payments below use the same standard amortization estimates as the Debt Payoff Calculator.
| Debt | Balance | APR | Required payment used | Payment assumption |
|---|
| Medical bill | $5,000 | 8% | $150.00/month | Illustrative assumed rate and payment |
| Credit card | $10,000 | 25% | $397.60/month | Estimated over 36 months |
| Car loan | $40,000 | 4.99% | $644.00/month | Provided payment; 72-month term |
| HELOC for a kitchen remodel | $25,000 | 10% | $531.18/month | Estimated over 60 months |
Which method wins in this example?
Avalanche saves both time and interest in this example. It attacks the 25% credit card first, while snowball closes the smaller medical bill first. Snowball produces an earlier visible win; avalanche prevents more high-rate interest from accumulating.
| Method | Payoff order | Estimated debt-free time | Estimated total interest |
|---|
| Avalanche | Credit card → HELOC → medical bill → car loan | 56 months | $12,214 |
| Snowball | Medical bill → credit card → HELOC → car loan | 57 months | $13,388 |
Here, avalanche becomes debt-free 1 month sooner and saves approximately $1,174 in interest. Snowball pays off the medical bill in 8 months, compared with 36 months under avalanche.
When would the results differ? The methods separate when a larger debt has a higher APR than a smaller debt. Avalanche targets the expensive interest rate; snowball closes the smaller balance. The calculator lets you enter your own debts to quantify that tradeoff rather than assume one method always produces a dramatically different result.
These are planning estimates, not lender quotes. The medical bill's 8% rate and $150 payment are illustrative assumptions, not claims about typical medical-debt terms. The example assumes fixed rates, no fees or new charges, monthly payments, and the specified extra payment continuing until all four debts are paid. Actual credit-card minimums, medical payment plans, and HELOC terms vary by lender or provider.
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