How the two methods work
You set one monthly budget: all the minimums plus whatever extra you can manage. Every month, interest is added to each debt, each gets its minimum, and the rest goes to the target debt. When a debt is paid off, its minimum is not spent elsewhere. It joins the extra and rolls onto the next target, which is what makes both methods speed up over time.
- Snowball: target the smallest balance first. You clear whole debts sooner, which many people find easier to stick with.
- Avalanche: target the highest APR first. Mathematically this always costs the same or less in interest.
Worked example
Three debts: a $4,500 Visa at 24.99%, a $1,200 store card at 17.99% and a $9,800 car loan at 7.5%. The minimums total $465, plus $200 extra, so $665 a month goes to debt.
Snowball pays off the store card in month 6, the Visa in month 19 and the car loan in month 27, with $2,241 in interest. Avalanche clears the Visa first, in month 16, and is also done in month 27, with $2,139 in interest. Avalanche saves about $102, while snowball gives you a paid-off card ten months earlier.
Which one should you choose?
If your rates are far apart, for example a 29% card and a 4% student loan, avalanche can save hundreds or thousands. If the rates are close, the difference is small and the quick wins of snowball may be worth more than the savings. Whichever you choose, the biggest lever is the extra amount: raising it shortens both plans.
What this leaves out
Interest is charged monthly at APR ÷ 12. Card minimums are held fixed at what you enter, though real card minimums fall as balances drop. Promotional 0% periods, fees and new borrowing are not included.
For a single card, the credit card payoff calculator also finds the payment needed to finish by a set date.