If you’ve got multiple debts — a credit card, a car loan, a student loan — there are two well-known strategies for which one to attack first with any extra money: the snowball method (smallest balance first, for motivation) and the avalanche method (highest interest rate first, for math). People argue about which is “correct,” but the honest answer is: it depends on your specific numbers, and the only way to know for sure is to actually simulate both.
That’s what our Debt Payoff Calculator does — it runs a real month-by-month simulation of each strategy against your actual debts, rather than relying on a rule of thumb.
How the simulation works
Each month, in order:
- Interest accrues on every debt’s current balance, at its own APR.
- Minimum payments go out to every debt.
- All “extra” money — your specified extra monthly payment, plus the minimum payments freed up from any debts you’ve already fully paid off — gets applied entirely to whichever debt is first in your chosen strategy’s order.
That third step is the “snowballing” effect: as each debt gets eliminated, its minimum payment doesn’t disappear — it gets redirected onto the next target, so your payoff power increases every time you eliminate a debt.
Snowball orders by balance, avalanche orders by rate
With three example debts — a $4,000 credit card at 22% APR, a $12,000 car loan at 6% APR, and an $8,000 student loan at 5% APR, plus $200/month extra — avalanche attacks in order Credit Card → Car Loan → Student Loan (highest rate first), while snowball attacks Credit Card → Student Loan → Car Loan (smallest balance first). In this example both strategies take the same 43 months to become debt-free, but avalanche saves a bit more in total interest ($2,975 vs. $3,035) since it prioritized the expensive 22% balance the same way, then targeted the next-highest rate rather than the next-smallest balance.
Why avalanche “usually” wins on interest, but not always
Avalanche mathematically minimizes total interest paid given the order it produces — but the actual dollar difference between the two strategies depends heavily on your specific balances and rates. When the smallest-balance debt also happens to carry a high rate (as in the example above), the two strategies’ orders overlap more and the interest gap shrinks. Snowball’s real advantage isn’t math — it’s behavioral: eliminating a full debt quickly, even a small one, builds momentum that keeps people sticking with a payoff plan.
What if the numbers don’t work?
If a debt’s monthly interest charge exceeds its minimum payment, that balance will actually grow instead of shrink, and the simulation runs until a 100-year safety cap — a clear signal that either the minimum payment or your extra payment amount needs to go up before that debt can ever be paid off.
Try it yourself with your own debts: Debt Payoff Calculator.