How the snowball works
Pay the minimum on every debt and put any extra on the smallest balance. When it is gone, its payment moves to the next one, so the amount you pay keeps growing.
Snowball or avalanche
Avalanche pays the highest rate first and costs less interest. Snowball clears a debt sooner, which keeps many people going. In the example, avalanche saves $73.88, but the first debt takes 17 months instead of 4.
What the extra payment does
The example owes $13,700 on three debts with $430 a month in minimums. Minimums alone take 43 months and $4,641.60 in interest. Adding $200 a month cuts that to 26 months and $2,055.46.
Frequently asked questions
Is the debt snowball or avalanche better?
Avalanche costs less interest. Snowball pays off the first debt sooner. Pick the one you will keep doing.
What if my extra payment changes?
Enter an amount you can pay every month. Put any bonus or refund on the debt you are targeting.
Should I include my mortgage?
Most people list credit cards, car loans and personal loans and leave the mortgage out. Add it if you want to pay it off early.
Are my numbers saved?
No. Nothing you type leaves this page.
Further reading
CFPB: Debt action plan ↗CFPB: Reducing debt worksheet ↗Educational examples, not individual financial advice.