Debt Payoff Calculator

Avalanche costs less; snowball gets finished

The avalanche method pays the highest interest rate first and is mathematically optimal — it always costs the least in total interest and is usually fastest. The snowball method pays the smallest balance first, which costs slightly more but clears individual debts sooner.

The case for snowball is not financial, it is behavioural: people are measurably more likely to keep going when they can see accounts disappearing. If the difference between the two in your case is small — and with similar rates it often is — the one you will actually finish is the better one. If one debt carries a far higher rate than the rest, that argument weakens and avalanche is worth the discipline.

Do this first, whichever method you pick

Before optimising the order, check whether the rate itself can be moved. A balance transfer at 0% for a fixed period, or a consolidation loan at a lower rate, changes the arithmetic more than any repayment ordering can. Two things to watch: the transfer fee, typically 2–4% up front, and what the rate becomes when the promotional period ends.

The trap is well documented. A transfer only helps if the balance is actually cleared within the promotional window and the original card is not used again in the meantime. Otherwise it relocates the debt and adds a fee.

Pay off debt, or invest?

Compare the interest rate against the return you could reasonably expect, and remember that clearing debt is a guaranteed return while an investment is not. At credit-card rates there is no contest. Below roughly 5–6% the case for investing instead gets real, particularly inside a tax-advantaged account or where an employer matches contributions — an employer match is an immediate return that almost no debt rate beats.

Mortgages usually sit at the bottom of the priority list: the rate is comparatively low, and the balance is secured against an asset.

What this model assumes

• Rates stay put. Variable rates move, and promotional rates expire on a date worth having in a diary.
• Payments are made on schedule. A single missed payment can end a promotional rate outright on many cards.
• Nothing new is added. The most common reason a payoff plan fails is not the ordering — it is continued spending on the same accounts.
• Minimums are covered. Whatever the strategy, every account gets at least its minimum; only the surplus is directed.