Debt Payoff Calculator — Avalanche vs Snowball Method

The honest recommendation: if the rate spread is large — say a 24% card alongside a 6% loan — avalanche's advantage is big enough to be worth the wait. If your balances carry similar rates, the difference is trivial and you should choose whichever you will actually finish.

Credit card minimums are typically calculated as a small percentage of the balance — commonly 1–3%, sometimes plus that month's interest and fees. Because the percentage applies to a shrinking balance, the required payment falls as you pay down, extending the timeline indefinitely.

On a $12,000 balance at 24% with a 2% minimum, the first payment is around $240, of which roughly $240 is interest. Almost nothing reduces the principal. As the balance edges down, so does the required payment, and the arrangement can run past twenty years.

The Credit CARD Act requires issuers to disclose this on statements: how long repayment takes at the minimum, and what it costs, alongside the payment needed to clear the balance in three years. That box is the single most useful piece of information on a credit card statement and the most widely ignored.

A balance transfer moves high-rate card debt to a card offering 0% for a promotional period, commonly twelve to twenty-one months, usually for a transfer fee of around 3–5% of the amount moved. If you clear the balance within the promotional window, the saving is substantial.

The trap is the end of the promotion. Any remaining balance reverts to the standard rate, which is often as high as the debt you left. A transfer only works if you divide the balance by the promotional months and commit to that payment from the first month, rather than intending to accelerate later.

A consolidation loan replaces several debts with one fixed-rate instalment loan. The genuine benefits are a fixed payoff date and a single payment. The genuine risk is that the cards are now empty and the temptation to use them is real — households that consolidate and then re-accumulate card balances end up worse off than before.

Neither tool addresses the spending that created the balances. They restructure debt; they do not resolve it.

Two things generally deserve to come before throwing everything at debt.

The first is a small emergency buffer. Without one, the next unexpected expense goes straight back onto a card, which turns a payoff plan into a cycle. Even $1,000 set aside prevents most of that.

The second is any employer retirement match. A 50% match is an immediate guaranteed return that exceeds the interest rate on almost any consumer debt. Declining it to pay down a 12% loan faster is usually a net loss.

Beyond those two, the ordering is straightforward: attack anything above roughly 8–10% aggressively, and treat low-rate debt such as a mortgage or subsidised student loan as a lower priority than investing.

Above ~15% —

credit cards and payday-type products. Clearing these is effectively a guaranteed return no investment can match.

8–15% —

personal loans, some private student loans. Still worth prioritising over most investing.

Below ~6% —

mortgages, federal student loans, many car loans. Paying the scheduled amount and investing the surplus is usually the stronger long-run choice.