Debt Avalanche Calculator

How the debt avalanche works

Interest is charged separately on each debt you hold, at that debt's own rate. So a dollar of extra payment is not equally valuable everywhere: sent to a 24.99% credit card it removes about 25 cents of future annual cost, while the same dollar sent to a 7.4% car loan removes about 7 cents. The avalanche method simply follows that logic to its conclusion — minimums on everything, and every spare dollar to the highest rate until it is gone.

When the most expensive debt clears, its entire payment rolls onto the next-highest rate. Nothing about the total you pay each month changes; only the destination of the extra moves. That is why avalanche produces the lowest possible total interest of any payoff order, mathematically, with no exceptions.

A worked example

The three debts loaded above total $20,100: a $5,200 card at 24.99%, an $11,500 car loan at 7.4%, and a $3,400 personal loan at 14.9%. Minimums come to $545 a month. The avalanche order is card, then personal loan, then car loan — note that the largest debt goes last, because it is also the cheapest.

Adding $150 of extra sends $280 a month at the credit card. It clears in roughly 20 months, at which point $280 moves onto the personal loan, which by then has shrunk on its minimums alone. The car loan absorbs the whole snowballed payment at the end and finishes far ahead of its original term. Every month of that sequence appears in the schedule above.

Avalanche versus snowball

Snowball attacks the smallest balance first instead. It always costs at least as much interest as avalanche, sometimes noticeably more, but it clears individual accounts sooner and many people find that easier to sustain. The comparison cards above run both plans on your figures and show the exact dollar gap, so the trade is a decision rather than a guess.

A useful rule of thumb: if the gap is small, pick the method you will finish. If the gap runs into four figures, the avalanche is worth the patience.

Watch for changing rates

Avalanche depends on the rates you enter being accurate and stable. Promotional 0% card offers, variable-rate lines of credit and penalty APRs after a late payment all reorder the plan. Enter the rate you are actually being charged today, and re-run this page whenever a promotional period ends or a rate changes.

The model assumes fixed rates, on-time payments and no new borrowing, and uses simple monthly interest rather than your lender's daily compounding — so treat the payoff date as a close estimate rather than a contract.