OraTwo priorities, one monthly budget
Avalanche prioritizes the highest annual rate. Snowball prioritizes the smallest opening balance. The CFPB debt-reduction worksheet explains these two targeting approaches and redirecting freed payments.
The budget here is the sum of the original entered minimum payments plus the extra monthly amount. It stays fixed after a debt closes. The tool does not recalculate an issuer's minimum as a percentage of the remaining balance or reduce your planned budget when an account is repaid.
Follow the monthly order
Opening balances set priorities once per month. Interest is each debt's opening balance × annual nominal rate ÷ 12, rounded half-up to a currency minor unit. Payments occur at month-end. Each fixed minimum is paid first, capped at the amount due; the remaining budget follows the selected priority and spills to the next debt in the same month if needed.
Avalanche ties go to the smaller balance; snowball ties go to the higher rate. Exact remaining ties use input order. If a positive-interest debt's assigned payment would not reduce it after rounded interest, the tool rejects the scenario rather than inventing a payoff date. An unpaid balance at the chosen horizon remains visibly unpaid.
For one balance with a fixed payment, use the single-balance payoff calculator instead of a multi-debt ordering model. The overpayment-interest guide explains the principal reduction behind the comparison and the lender terms that can change a real outcome.
Compare three debts at a fixed 225.00 budget
On a narrow screen, scroll the table horizontally to see all columns.
| Debt | Opening balance | Annual rate | Fixed minimum |
|---|---|---|---|
| A | 1,000.00 | 18% | 40.00 |
| B | 500.00 | 6% | 25.00 |
| C | 2,000.00 | 24% | 60.00 |
The minimums total 125.00. Add 100.00 extra for a fixed 225.00 monthly budget. Avalanche first directs the extra to C; snowball first directs it to B.
Under this tool's monthly rounding and allocation conventions, avalanche clears the debts in 18 months with 549.22 interest. Snowball takes 19 months with 661.59 interest. The interest difference is 112.37. These are matched model outcomes, not universal savings promises.
An arithmetic priority is not a full debt plan
The model excludes new borrowing, fees, promotional or variable rates, actual daily interest, missed payments, penalties, changing required minimums and restrictions on extra principal. A real account can therefore differ substantially. The final month's unused budget is not a payment and is not counted as interest saved.
It also does not assess secured or priority obligations, legal consequences, settlement, eligibility or personal affordability. Do not use a rate ranking to decide which essential or legally urgent payment to miss. Reconcile the inputs with actual agreements and statements; this is a transparent comparison, not financial counseling.
Common questions
Does the budget shrink as debts are paid?
No. The original minimums plus extra form a fixed monthly budget. Freed amounts are redirected to remaining debts, subject to the amount actually due.
Does avalanche always produce the exact saving in the example?
No. The example is one specific set of balances, rates and payments. Different inputs, fees or real-world rules change the result.
Does this reproduce my credit-card statement?
No. It uses fixed minimum assumptions, nominal annual rates divided by 12 and monthly rounding. Issuers can use daily calculations, multiple rates and changing minimums.
Educational estimate using the stated assumptions. Fees, taxes, changing rates and individual circumstances can change an outcome. This is not personalized financial advice. Read the estimates disclaimer.