Debt payoff

• Every debt gets its minimum payment first. Whatever is left over is the extra, and the strategy decides where it goes.
• Avalanche sends the extra to the highest interest rate. With the same total monthly payment, it costs the least in total interest or ties.
• Snowball sends the extra to the smallest balance. It can cost more in interest and can clear a small debt sooner.
• When a debt is cleared its whole payment rolls into the next one, so the last debts fall much faster than the first.

Say you carry $8,000 at 24%, $3,000 at 18% and $1,500 at 7%, with minimums of $240, $90 and $45 and $600 a month to spend in total. Avalanche pays down the 24% card first and clears everything in about 26 months for roughly $2,900 in interest. Snowball clears the $1,500 first, in about six months, and finishes a month later for roughly $3,500 in interest, about $600 more. On these numbers the cost of the snowball is real but modest. On a larger rate spread it is not.

• Rates stay fixed. A variable APR or a promotional rate that expires will change the answer.
• You do not add new balances to the cards while paying them down.
• Federal student loans are treated like any other debt. The lab does not model income-driven plans or forgiveness, so check studentaid.gov for the options on those loans.
• Payments land on schedule. A missed payment can trigger a penalty APR that undoes months of progress.
• Minimum payments are treated as fixed. Most card issuers recalculate them as the balance drops, which slows real payoff slightly.

Finance Quest is educational. It is not financial advice, and no calculator here knows your full situation.

Avalanche minimizes interest under the lab's assumptions, sometimes tying snowball. But the plan that works is the one you actually finish. If clearing a small balance in month one is what keeps you going, the snowball's extra cost is buying something real. Run both, look at the gap, and decide whether it is worth it to you. If the gap is a few hundred dollars, pick the one you will stick to. If it is thousands, that is a different conversation.

• Debt avalanche vs debt snowball: which pays off debt faster?Highest rate first or smallest balance first, with a three-debt example.
• Where should your next dollar go?The usual order for your money, and where guides disagree.

• Credit utilizationSee per-card and overall utilization, and the paydown that clears a threshold.
• Emergency fundSize and timeline a reserve from monthly burn.
• High-yield savingsCompare a high-yield rate against a big-bank rate on the same balance.