Enrichment · Life Skills

Smallest balance first, or highest rate first.

Enter each debt and what you can pay in total each month. The comparator runs both payoff orders month by month, so you can see what the quick wins of the snowball cost against the interest the avalanche saves.

Compare the two plansWhat you get

The comparator

The worked example has five made-up debts and $750 a month. Change any number and both plans, the chart and the schedule follow.

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What you get

Enrichment · Life SkillsFree

What you finish with
Two payoff plans for your own debts: months to debt-free, total interest, the order and month each debt is cleared, a balance chart against paying minimums only, and a month-by-month schedule you can print or save as a spreadsheet.
Who it is for
Young adults with a first credit card or car loan, families sorting out several debts, and the high school and adult-education teachers who teach personal finance.
Format
Browser tool. Works on a phone or computer. Print or save as PDF, a month-by-month .csv, and a file to move your list between devices.
Access
Free. No account and no sign-in. Balances stay in this browser; nothing is sent to Caveat.
Where it lives
The Life Skills space in Caveat Enrichment.
Support
Questions, a correction or a request: team@caveatacademic.com.

How to use it

  1. From each statement, copy the balance, the APR (the yearly interest rate) and the minimum payment.
  2. Enter the total you can put toward all of the debts each month. It has to cover every minimum.
  3. Compare the two cards: months to debt-free, total interest and the month your first debt disappears.
  4. Try the slider to see what an extra $50 or $100 a month changes.
  5. Print the plan you choose and tape it where you pay bills.

Compare the two plans

How the plans are worked out

The same month-by-month arithmetic for both orders, so the only difference is where the extra money goes.

Each month, in order

  • Interest is added to each open balance at one twelfth of its APR, rounded to the cent.
  • Every open debt gets its minimum payment, or the rest of its balance if that is smaller.
  • Whatever is left of your monthly total goes to the target debt. When it is paid off, the leftover spills to the next one, and its old minimum becomes extra from then on.
  • Snowball targets the smallest balance first. Avalanche targets the highest APR first. Ties go to the higher rate, then the smaller balance.
  • Minimums only pays each debt its own minimum and nothing more, as a baseline.

What to keep in mind

  • The avalanche always costs the same or less interest when you stick to it. The snowball gives earlier wins, and some research on real repayment suggests clearing whole accounts helps people keep going.
  • Card issuers usually charge interest daily on the average daily balance, and rates on cards can change, so real statements will differ a little from these estimates.
  • Promotional 0% balances that end on a set date, fees and new charges are not modeled. If a 0% period is ending, treat that debt as high-rate from that date.
  • Keep paying every minimum on time either way: a missed payment can bring a late fee and a penalty rate.

The worked example, checked when the page is built. Five made-up debts total $19,080 with minimums of $590, and $750 a month goes to them. The snowball pays off the $480 store card in month 3 and the dental plan in month 7, and is debt-free in 31 months with $3,572 of interest. The avalanche puts the extra on the 24.99% Visa card first, so its first payoff waits until month 23, but it is debt-free in 30 months with $3,028 of interest: $544 less. Paying only the minimums would take 87 months and $7,860.

Sources

  1. Consumer Financial Protection Bureau, Your Money, Your Goals toolkit, the debt module and its "Debt log" and debt-reduction tools: listing each debt's balance, rate and minimum, and choosing to pay the highest rate or the smallest balance first (consumerfinance.gov).
  2. Credit Card Accountability Responsibility and Disclosure Act of 2009 (Regulation Z, 12 CFR 1026.7(b)(12)): card statements must show how long paying only the minimum would take, and the cost.
  3. Consumer Financial Protection Bureau, "What is a credit card interest rate? What does APR mean?" and related answers: how APR and daily periodic rates work on credit cards.
  4. David Gal and Blakeley B. McShane, "Can Small Victories Help Win the War? Evidence from Consumer Debt Management," Journal of Marketing Research 49, no. 4 (2012): closing out individual debts was associated with a higher chance of eliminating all debt.

General information, not financial advice. The comparator does arithmetic on the numbers you enter; it cannot see your accounts, fees or rate changes. The worked example's debts are made up. If debt payments are crowding out rent, food or utilities, a nonprofit credit counselor can help you look at options. Support: team@caveatacademic.com.