Debt Snowball vs Avalanche: What the Order Actually Costs, Worked Through
The theory is not in dispute. The avalanche method - pay minimums on everything, then throw every spare dollar at the highest interest rate - pays the least interest. The snowball method - spare dollars to the smallest balance first - clears whole debts sooner, which some people find easier to stick with.
What it needs is a number. “Avalanche is optimal” is true, and useless until you know whether optimal means a hundred dollars or a few thousand. So here are two sets of debts, worked month by month, on the same $700 a month.
Example 1: a mixed set where the smallest debt is the dearest
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Store card | $900 | 26.99% | $27 |
| Credit card A | $4,200 | 22.49% | $105 |
| Credit card B | $2,100 | 18.99% | $53 |
| Car loan | $11,500 | 7.89% | $232 |
| Personal loan | $6,800 | 11.49% | $158 |
That is $25,500 owed, with minimums of $575 a month, leaving the rest of the $700 budget as surplus.
| Avalanche | Snowball | |
|---|---|---|
| Total interest paid | $6,066.89 | $6,171.32 |
| Months to debt-free | 46 | 46 |
| First debt cleared in month | 7 | 7 |
Choosing snowball here costs $104.43 - 1.7% more interest - and finishes in the same month. The whole argument is worth about a hundred dollars over four years.
The reason is the store card. It is the smallest balance and the most expensive rate, so both methods attack it first. They only part ways later, on debts whose rates are close together.
Example 2: the case that breaks it
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Small store card | $600 | 4.99% | $20 |
| Medium loan | $3,000 | 8.99% | $70 |
| Big credit card | $14,000 | 26.99% | $350 |
Now the smallest debt is the cheapest, and the big one is the dearest.
| Avalanche | Snowball | |
|---|---|---|
| Total interest paid | $6,504.74 | $7,955.41 |
| Months to debt-free | 35 | 37 |
| First debt cleared in month | 33 | 3 |
Here snowball costs $1,450.67 (22.3% more) and finishes 2 months later. Snowball spends its early surplus clearing a 4.99% balance while 26.99% compounds on the large card.
But look at the last row. Snowball clears its first debt in month 3; avalanche doesn’t clear anything until month 33. That is 30 months of visible progress, and for some people that is exactly what keeps them paying. It is a real trade, not a mistake - but now it has a price you can look at.
The one question that decides it
Is your smallest balance also your highest rate?
- If yes, or nearly, the two methods start in the same place, and the difference is small. Pick the one you will actually stick to.
- If your smallest balance is cheap and a big balance is expensive, the gap can run into four figures. Avalanche, unless you know you need the early wins.
The number that matters more than the order
On the mixed set above, paying $100 a month more with avalanche saves $1,209.58 in interest and finishes 8 months sooner - about 12 times what the snowball-or-avalanche decision is worth.
If you have an hour to spend on your debts, on these numbers the order is worth far less than finding an extra $50 or $100 a month, or phoning to ask for a lower rate on the most expensive card. If one of the debts is a student loan in a pause, the capitalized interest post shows what the pause adds.
How these were calculated
Each month: interest is added to every balance at its annual rate divided by twelve; every minimum is paid; whatever remains of the budget goes to the target debt, and the next target once that is cleared. Minimums are held flat as balances fall, which is conservative. Every figure on this page was computed twice, by two independent programs, and they agree to the cent. The debts are illustrative examples, not typical balances, and none of this is financial advice.
If you want this run on your own debts - including the answer to that one question, and what an extra payment or a rate cut is worth - the spreadsheet below does exactly this arithmetic.