Debt Snowball vs Avalanche Calculator

Compare the psychological 'Snowball' method with the mathematically superior 'Avalanche' method to see exactly how much time and money you can save.

1. Your Debts

Enter up to 4 debts. Leave unused ones at zero.

Debt 1 (e.g. Credit Card)
$
Debt 2 (e.g. Store Card)
$
Debt 3 (e.g. Car Loan)
$

2. Extra Repayment Power

$
Amount you can afford to pay ON TOP of all minimums.

The Comparison

Which method is right for you?

Method 1: Debt Snowball

Pay smallest balance first for psychological wins.

Time to Debt Free: 0 Months
Total Interest Paid: $0

Method 2: Debt Avalanche

Pay highest interest rate first for mathematical savings.

Time to Debt Free: 0 Months
Total Interest Paid: $0
Avalanche Saves You: $0

How to Destroy Debt in Australia

If you are juggling multiple credit cards, personal loans, and car loans, making the minimum payments on all of them is incredibly slow and expensive. To get out of debt quickly, you need a strategy. The two most famous strategies are the Snowball and the Avalanche.

The Debt Snowball (Lowest Balance First)

Popularised by financial authors like Scott Pape (The Barefoot Investor) and Dave Ramsey, the Snowball method ignores interest rates entirely. You list your debts from smallest balance to largest. You pay the minimums on everything, and put 100% of your extra cash toward the smallest debt until it is gone. Then, you take the money you were paying on that debt and 'snowball' it onto the next smallest debt.

Why use it? Human psychology. Paying off a $1,000 credit card in three months gives you a massive motivational win. This keeps you engaged in the process.

The Debt Avalanche (Highest Interest First)

The Avalanche method is the mathematically optimal way to pay off debt. You list your debts from highest interest rate to lowest interest rate. You pay the minimums on everything, and put 100% of your extra cash toward the debt with the highest interest rate.

Why use it? It saves you the most money. By destroying the most 'toxic' high-interest debt first, you stop the bank from bleeding your cash flow. However, if your highest interest debt is also your largest balance (e.g., a $20,000 credit card), it might take you a year to see your first 'win', which can be psychologically exhausting.

Related Calculators

Credit Card Calculator Snowball vs Avalanche Debt Consolidation

Get free financial counselling advice from the National Debt Helpline.

10 Frequently Asked Questions

1. What is the Debt Snowball method?
You pay off your debts from smallest balance to largest balance, regardless of interest rate, to gain psychological momentum.
2. What is the Debt Avalanche method?
You pay off debts from highest interest rate to lowest interest rate. This is mathematically the fastest way to save money.
3. How does credit card interest work?
Interest is calculated daily on your outstanding balance and charged monthly. Rates typically range from 10% to 24% p.a.
4. What happens if I only pay the minimum?
Paying only the 2-3% minimum means it will take years or decades to clear the balance, costing thousands in interest.
5. Will a balance transfer help?
A 0% balance transfer can give you breathing room to pay down principal without interest, but ensure you pay it off before the promotional period ends.
6. Can debt collectors seize my property?
In Australia, unsecured debt collectors cannot seize your property without a court order, but they can list defaults on your credit file.
7. What is financial hardship?
If you are struggling to make payments due to job loss or illness, you can legally request a 'hardship variation' from your bank to pause payments.
8. Does cancelling a credit card improve my score?
Cancelling unused cards lowers your total credit limit, which improves your borrowing power for a home loan.
9. What is a default?
If a payment is more than 60 days overdue, it can be recorded as a default on your credit file and stay there for 5 years.
10. Where can I get free help?
The National Debt Helpline (1800 007 007) offers free, confidential financial counselling to all Australians.