Debt snowball vs avalanche calculator

The avalanche, and it is not a matter of taste. With the same money going out every month, sending the surplus to the debt where interest runs fastest takes more interest out of the total. It never costs more than the snowball, and it never takes longer to finish.

The two often finish in the very same month, though. When that happens the whole difference between them is the interest paid, not the deadline.

Because it clears the first debt much sooner, and a plan you keep going with beats a cheaper plan you give up on. In the example loaded by the button, the snowball closes a debt in month two and the avalanche only in month eight.

That is the whole trade, and it is why both numbers are on the screen: the tool measures the two and leaves the choice with the person paying.

Per month, because that is how revolving credit and overdraft are usually quoted. If you only have the yearly rate, the monthly one is not the yearly divided by twelve: it is the twelfth root of one plus the yearly rate, minus one.

A yearly rate of 60 percent, for instance, is close to 3.99 percent a month, not 5 percent.

It can. When the minimum payment is smaller than the interest of the month, the balance goes up even while it is being paid, and that is exactly what revolving card credit does.

While that debt is the one getting the surplus it still goes down, so the tool does not refuse the case in advance: it simulates it and only warns when neither method ever finishes.