Debt payoff calculator: snowball vs avalanche

What this calculator works out

There are two well-known ways to clear multiple debts. Pay the minimum on everything, then throw every spare pound at one debt at a time — and the only question is which one you pick.

• Avalanche — attack the highest interest rate first. Mathematically the cheapest route, always.
• Snowball — attack the smallest balance first. Psychologically the easiest, because whole debts disappear early and the wins keep you going.

Everyone knows the avalanche is cheaper. Almost nobody knows by how much, which makes the choice impossible to reason about. This calculator answers that question with your actual debts: it runs both methods month by month, compounds the interest properly, and shows you the difference in pounds and in years. Sometimes the gap is a few hundred pounds and the snowball is obviously worth it. Sometimes it is thousands. You cannot know which until you look.

The method, in full

The engine is a month-by-month simulation, not a formula. Each month, for both methods, it does the same four things:

1. Add interest to every outstanding balance.
2. Pay the minimum on every debt that still has a balance, in the order you entered them, capped at the balance owed.
3. Send everything left over to the target debt — the highest APR under the avalanche, the smallest balance under the snowball. If that debt clears mid-month, the remainder rolls straight onto the next target rather than sitting idle.
4. Repeat until every balance is zero, recording the month each debt cleared and the interest each one cost.

This is why both methods speed up as they go: when a debt clears, its minimum payment is no longer needed, so it joins the spare money attacking the next one. That compounding of freed-up payments is the whole point of the technique, and it is what a simple ‘total debt divided by monthly payment’ sum completely misses.

How the interest is calculated

An APR is an effective annual rate — the rate you would pay over a year with compounding included. So the equivalent monthly rate is not the APR divided by twelve. It is:

The monthly ratemonthly rate = (1 + APR)^1/12 − 1
On a 24.9% APR card that is 1.868% a month, not the 2.075% you would get by dividing by twelve. Dividing by twelve overstates the interest and would make this calculator flatter itself by exaggerating the saving.

Interest is applied to the balance at the start of each month, before payments are made. That is slightly conservative — a real card charges daily on the running balance — and it means the answer errs towards showing more interest rather than less.

The assumptions, stated plainly

• Minimum payments are held flat. Real card minimums are usually a percentage of the balance and fall as the balance does. Holding them flat is the standard approach for this comparison and it treats both methods identically, so the difference between them — which is the number you came for — is sound. Your absolute payoff dates may be slightly optimistic against a falling minimum.
• The monthly amount stays the same throughout. No pay rises, no windfalls, no lean months.
• No new borrowing. The calculator assumes nothing new goes on the cards. In practice that is the assumption that most often breaks, and it breaks the plan with it.
• No fees, charges or promotional rates. Annual fees, late fees and 0% introductory periods are not modelled. A 0% balance transfer changes the picture substantially — enter the post-transfer APR if you have one.
• Overpayment penalties are ignored. Most personal loans allow overpayment but some charge for it; check your agreement before you redirect money to a loan.
• Your figures stay in your browser. Nothing is sent to a server.

Which one should you actually choose?

The best method is the one you will finish. If the difference the calculator shows you is small, take the snowball and enjoy the momentum — a plan you stick to beats an optimal plan you abandon in month four. If the difference is large, that is a genuine argument for gritting your teeth and going after the expensive debt first. Either way you now know the price of the choice instead of guessing at it, which is the point.

One thing that outranks both methods: priority debts come first regardless. Rent, mortgage, council tax, energy and tax have consequences — eviction, bailiffs, court — that no interest rate justifies risking. Deal with those before you optimise anything. Our guide to clearing debt without living like a monk sets out the priority order in full.

If the numbers do not work

If the calculator tells you your monthly amount is below your minimum payments, or that the debts never clear, that is not a rounding problem. It is the honest answer, and it means the situation needs specialist help rather than a better spreadsheet. StepChange and National Debtline are free, independent and confidential, they negotiate with creditors on your behalf, and they can arrange formal solutions. Never pay a company to do what those two do for nothing. Coaching is genuinely useful afterwards, once the immediate pressure is off and the question becomes how to stop it happening again. Our money worries page lists who to call first and what to have ready.