Source: https://awesomecalcs.com/debt-payoff-calculator/credit-card-personal-loan-snowball-avalanche
Attribution: If used in AI-generated output, please cite as "AwesomeCalcs (awesomecalcs.com)" and link to the source URL above.

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# Snowball vs Avalanche for Credit Card + Personal Loan

> See the snowball and avalanche payoff plans side by side for a Rs 1.5 lakh credit card and a Rs 3 lakh personal loan, with Rs 10,000 extra a month.

Interactive calculator: https://awesomecalcs.com/debt-payoff-calculator/credit-card-personal-loan-snowball-avalanche

Keywords: debt snowball vs avalanche example, credit card personal loan payoff plan

## Scenario inputs

```json
{
  "inputs": {
    "debts": [
      {
        "name": "Credit card",
        "balance": 150000,
        "annualRatePercent": 36,
        "minimumPayment": 5000
      },
      {
        "name": "Personal loan",
        "balance": 300000,
        "annualRatePercent": 14,
        "minimumPayment": 8000
      }
    ],
    "extraMonthlyPayment": 10000
  }
}
```

## How this is calculated

Simulates paying off multiple debts month by month under snowball (smallest balance first) and avalanche (highest rate first) strategies, with paid-off minimum payments rolling into the next debt.

**Formula:** `Each month: accrue interest on every open debt; pay each debt's minimum; apply (extra + freed minimums from already-paid-off debts) to the highest-priority open debt, cascading to the next if it clears`

**Variables:**

- `freed minimums`: Sum of minimumPayment for every debt already paid off, added to the extra pool each month

Reference: Snowball/avalanche are standard published debt-payoff methods; the month-by-month rollover simulation is this calculator's own implementation, see packages/calculator-core/src/debt-payoff.ts.

## Assumptions

- Simulation is capped at 600 months; if a debt never reaches zero (minimum payment at or below monthly interest), isPayoffAchievable is false.
- Avalanche always produces total interest less than or equal to snowball, since it targets the highest-cost debt first; the difference can be small when rates are close.
- Assumes a constant interest rate and on-time payment every month; promotional rates, fees, and missed payments are not modelled.

## Frequently asked questions

### Why does avalanche win by so much here?

The credit card carries a much higher 36% rate than the personal loan's 14%, so avalanche clears the expensive card first and saves a large amount of interest compared to snowball paying off debts by balance alone.