What is the Debt Avalanche method?

Debt Avalanche is a payoff strategy where you pay minimum payments on every debt, then send any extra money to the debt with the highest APR (interest rate). Once that highest-rate balance is cleared, you “roll” its payment into the next-highest APR debt, and repeat. Over time, the avalanche approach typically produces the lowest total interest and often the fastest payoff for the same monthly budget.

This calculator runs a month‑by‑month simulation of your debts using your balances, APRs, minimum payments, and a single monthly “extra payment” amount. The result is a realistic payoff timeline, total interest estimate, and a clear payoff order. It’s built for practical planning: you can test scenarios like “What if I add $150/month?” or “What happens if I pay off my 24.99% card first vs my 10% personal loan?”

• Mathematically efficient: prioritizes the costliest debt first (highest APR).
• Usually saves interest: compared to paying smallest balance first.
• Simple rules: minimums on all, extra to the highest APR.
• Motivation improves over time: payments “snowball” as accounts get cleared.

How to use this calculator like a pro

Start by adding your debts exactly as they appear on statements: the current balance, APR, and required minimum payment. If you don’t know the exact minimum payment formula, just use the current minimum shown on your statement. Then choose a realistic extra monthly payment you can commit to consistently.

• Increase extra payment slightly: even +$25 to +$100/month can cut months (or years) off payoff.
• Stop adding new debt: avalanche works best when balances are not growing.
• Consider refinancing: lowering APR can sometimes beat any strategy change (test with the calculator).
• Pay on time: late fees and penalty APR can destroy your plan.

Pro tip: If two debts have the same APR, the calculator breaks ties by sending extra to the higher balance first. You can change that by slightly adjusting APR (e.g., 18.00% vs 18.01%) if you want to force a specific order.

The math behind the Debt Avalanche payoff

Most real payoff plans are easiest to model in monthly steps. Each month, interest is added to each remaining balance, then payments reduce those balances. The avalanche rule only changes where the extra payment goes.

If a debt has balance B and APR r (as a percent), a simple monthly interest estimate is:
monthlyRate = (r / 100) / 12
interestThisMonth = B × monthlyRate

You pay at least the minimum payment on each debt (unless the balance is smaller than the minimum, in which case you just pay it off). The calculator applies minimum payments to all debts first, then applies your extra payment to the highest APR debt that still has a balance.

Once a debt hits $0, you no longer owe that minimum. In practice, most people keep paying the same total monthly amount and redirect that freed minimum to the next target. That’s the “avalanche momentum” effect. This tool models that automatically because your minimum payments drop as debts disappear, and your “available extra” effectively increases against the remaining debts.

• This is a planning tool, not legal or financial advice.
• Credit cards often compute daily interest; we use a monthly approximation for clarity and speed.
• Some lenders change minimum payment rules over time; your statement is the best reference.

Debt Avalanche example (simple scenario)

Suppose you have three debts and can put an extra $200/month toward payoff:

• Card A: $2,500 at 24% APR, $75 minimum
• Card B: $4,000 at 18% APR, $120 minimum
• Loan C: $6,500 at 10% APR, $160 minimum

Avalanche targets the highest APR first: Card A (24%). You pay minimums on all three, then send the extra $200 to Card A until it’s gone. After Card A is cleared, you roll what you were paying on Card A into Card B (18%). Finally, you focus on Loan C (10%).

Compared to paying the smallest balance first (Debt Snowball), avalanche usually reduces total interest because it attacks the most expensive debt earlier. The tradeoff is psychological: snowball can produce quicker “wins” if your smallest balance is tiny. If motivation is your biggest challenge, you can still use avalanche math but set small milestone goals (like “pay off Card A in 5 months”).

Step-by-step payoff algorithm used here

1. Collect debts: For each debt, you enter balance, APR, and minimum payment.
2. Add interest monthly: Every month, interest is added to each remaining balance.
3. Pay minimums: Minimum payments are applied to each debt (without overpaying past $0).
4. Apply extra payment: Your extra amount goes to the current highest APR debt that still has a balance.
5. Repeat: The simulation continues until all balances reach $0 (or a safety cap is reached).
6. Summarize: The tool reports payoff time, total interest paid, and a payoff order timeline.

The result is a realistic “plan” you can screenshot, share, and revisit. Because this is simulated month by month, it also handles real-world situations like a debt being paid off mid-plan and your cash flow freeing up.

Make your plan more accurate

• Use current balances: even if they change weekly, start with today’s numbers.
• Use APR, not “interest rate” marketing: APR is what drives cost over time.
• Include all minimums: if you forget one, the plan can look unrealistically fast.
• Be honest with extra payment: consistency beats huge one-time payments.
• Check fees: annual fees or late fees are not included—add them mentally if they apply.

If your payoff time looks “too long,” don’t panic—run small experiments: add $25, then $50, then $100. The payoff curve is often non-linear, meaning small changes can create big timeline differences.

Frequently Asked Questions

• Is Debt Avalanche better than Debt Snowball?

  Mathematically, avalanche usually wins because it prioritizes high-interest debt, which reduces total interest. Snowball can be better if you need faster emotional wins to stay consistent. If you stick with your plan either way, avalanche typically costs less.

• What if my minimum payments change each month?

  Many credit cards set minimums as a percentage of balance (plus interest/fees), so the number can shift. This calculator uses the minimum payment you enter as a stable baseline. For planning, that’s still useful. If you want more realism, update your minimum payments occasionally and re-run the plan.

• Does the calculator include daily compounding?

  Not exactly. Credit cards often use daily periodic rates, and lenders can have different conventions. We use a monthly interest approximation for clarity. For most planning decisions (“Which debt first?” and “How much extra?”), the difference is usually small.

• What if I can’t afford all minimum payments?

  Then the plan isn’t feasible as entered. If your total minimums exceed what you can pay, focus on stabilization: contact lenders, consider hardship programs, reduce expenses, or get professional guidance. This tool is best used once you can at least meet minimums.

• Should I refinance instead?

  Refinancing can be powerful if it lowers your APR substantially (and fees are reasonable). You can model “before vs after” by lowering the APR of a debt (or combining balances into one new loan) and comparing results.

• Is my data private?

  Yes. This calculator runs entirely in your browser. If you use “Save Plan,” it stores data locally on your device (like a cookie or local app storage). Nothing is sent to a server by this page.

Why payoff plans fail (and how to fix them)

• New spending on cards: even small new charges can erase the benefit of extra payments.
• Overestimating extra payment: choose a number you can hit on “bad months” too.
• Ignoring interest rate jumps: promo rates can end; penalty APR can appear after late payments.
• Not tracking progress: plan once, then do a monthly check-in to stay motivated.

If you want virality: screenshot your “Debt Free Date,” share your before/after months saved, or challenge a friend: “Can you beat my payoff date with the same budget?” (Just don’t share account numbers—ever.)