Debt snowball vs avalanche: a worked example
Updated 13 October 2026
Both methods do the same thing: pay the minimum on every debt, then throw every spare dollar at one debt until it's gone, then the next. The only difference is the order.
- Snowball: smallest balance first. You clear a debt quickly, which keeps you going.
- Avalanche: highest interest rate first. Mathematically it costs less interest.
The example
| Debt | Balance | Interest (per year) | Minimum (per month) |
|---|---|---|---|
| Store card | $900 | 19.9% | $40 |
| Credit card | $3,500 | 21.5% | $90 |
| Car loan | $8,000 | 9.5% | $200 |
Total minimums are $330 a month. In this example there's an extra $200 a month on top, so $530 goes to debt every month. When a debt is cleared, its minimum rolls on to the next one.
The results
| Method | First debt gone | All debts gone | Total interest |
|---|---|---|---|
| Minimums only | Month 29 | Month 50 | $4,042.41 |
| Snowball | Store card, month 4 | Month 27 | $1,807.33 |
| Avalanche | Credit card, month 14 | Month 27 | $1,793.29 |
In every row, when a debt is cleared its minimum rolls on to the next debt. "Minimums only" means no extra $200.
What the numbers say
- The extra $200 a month does most of the work: it cuts nearly two years and about $2,200 of interest compared with minimums only.
- Avalanche saves $14.04 here, and both finish in the same month. The gap is small because the two highest rates are close (19.9% and 21.5%).
- Snowball clears the first debt in month 4 instead of month 14. If an early win keeps you on track, that can matter more than $14.
The gap grows when one debt has a much higher rate than the others, or when the high-rate debt is also the biggest. Run your own numbers before you pick.
How these were worked out
Each month, interest is added (the yearly rate divided by 12, rounded to the cent), the minimums are paid, and the extra goes to the target debt. It assumes no new spending on the cards and that rates and minimums don't change. Real lenders often charge interest daily, so real figures will differ a little.
Try it: Debt payoff calculator: your debt-free date for one debt, with and without extra payments.
Common questions
Which one should I choose?
If your interest rates are close, the difference is small, so the one you're more likely to stick with is usually the better choice: snowball gives quicker wins. If one debt has a much higher rate, avalanche usually saves more.
What if I can't keep up with the minimum payments?
Lenders can often arrange hardship options, so contact them early. You can also call the National Debt Helpline on 1800 007 007 (ndh.org.au) for free financial counselling.
Does this include my mortgage?
This example doesn't. Most people leave a mortgage out and focus on cards and personal loans, which usually have much higher rates.
Got more than one debt?
The Debt Payoff Planner lists up to 20 debts and compares minimums only, snowball, avalanche and your own order side by side, with exactly what to pay each debt every month.
See the Debt Payoff PlannerGeneral information only, not financial advice.