The avalanche method saves more: $428 in interest and one month versus the snowball. It targets the 27% card first, cutting the costliest balance fastest.
The math
Inputs
| Loan at 9% | $1,500 at 9% APR, $45 minimum |
|---|---|
| Card at 27% | $4,000 at 27% APR, $110 minimum |
| Card at 18% | $7,000 at 18% APR, $175 minimum |
| Total monthly budget | $500 |
The formula in words
Every month: add interest to each debt (balance × APR ÷ 12), pay every minimum, then send the rest of the $500 budget to one target debt. Snowball targets the smallest balance; avalanche targets the highest APR. When a debt is gone, its minimum rolls into the extra payment. Repeat until every balance is $0 and add up the interest.
Step by step
| Method | Debt-free in | Total interest | Total paid |
|---|---|---|---|
| Snowball (smallest balance first) | 33 months | $3,841 | $16,341 |
| Avalanche (highest APR first) | 32 months | $3,414 | $15,914 |
| Debt | Balance | APR | Snowball | Avalanche |
|---|---|---|---|---|
| Loan at 9% | $1,500 | 9% | Month 8 | Month 32 |
| Card at 27% | $4,000 | 27% | Month 22 | Month 18 |
| Card at 18% | $7,000 | 18% | Month 33 | Month 32 |
Result
- Snowball: debt-free in: 33 months (2 years and 9 months)
- Snowball: total interest: $3,841
- Snowball: payoff order: Loan at 9% (month 8), Card at 27% (month 22), Card at 18% (month 33)
- Avalanche: debt-free in: 32 months (2 years and 8 months)
- Avalanche: total interest: $3,414
- Avalanche: payoff order: Card at 27% (month 18), Loan at 9% (month 32), Card at 18% (month 32)
- Interest the avalanche saves: $428
- Difference in time: 1 month
Assumptions
- The same $500 every month, fixed minimum payments as listed, and no new charges.
- These are estimates that show how the math works, not financial, tax or legal advice. Lenders, card issuers and the IRS can calculate slightly differently.
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What the $428 difference means for you
The avalanche method saves you $428 in interest and gets you debt-free 1 month sooner than the snowball method. That $428 is real money you keep instead of paying to lenders. The one-month difference is small, but it still means one less payment cycle and a slightly earlier finish.
For a stressed reader, the key takeaway is that the avalanche method is the cheaper choice on this exact set of balances. It does not require a bigger monthly payment or any new account. You keep the same $500 budget and simply point the extra money at the 27% card first.
The snowball method is not wrong, but on these numbers it costs more. The snowball clears the $1,500 loan at 9% first, which feels good because it removes a whole debt early. The avalanche instead clears the $4,000 card at 27% first, which is the most expensive balance you carry. That is where the $428 comes from.
What drives the result: the 27% card
The biggest driver is the 27% card. Interest is added each month as balance times APR divided by 12, so a higher rate costs more every month the balance stays open. The avalanche method sends extra money to that card first, so the balance that charges the most disappears sooner.
Under the avalanche, the 27% card is paid off in month 18. Under the snowball, it is not paid off until month 22. Those extra months at 27% are what make the snowball cost more. The $1,500 loan at 9% is cheaper to carry, so paying it first does not save as much.
The 18% card is the largest balance at $7,000, and it is paid last in both methods. Because it is last either way, the choice between snowball and avalanche mostly affects how long the 27% card and the 9% loan stay open. The avalanche keeps the most expensive balance open for fewer months, which is why total interest is $3,414 instead of $3,841.
How to change the outcome with the numbers you have
You can shift the result by changing where the extra money goes, not by changing the budget. With the same $500 each month, the avalanche order is the 27% card first, then the 9% loan and the 18% card. The snowball order is the $1,500 loan first, then the 27% card, then the 18% card.
If you want the lowest total interest on these exact balances, use the avalanche order. If you want the psychological win of removing a debt early, the snowball clears the $1,500 loan by month 8. That early win costs you $428 more in interest and 1 month of payments compared with the avalanche.
You could also change the outcome by keeping the same $500 budget but making sure every minimum is paid before the extra is sent to the target debt. The calculation assumes fixed minimums of $45, $110, and $175, and no new charges. If a minimum changes or you add new charges, the result will differ. Confirm the exact minimums and rates with your lender or card issuer.
Practical next steps
First, list the three balances and rates exactly as they appear on your statements: $1,500 at 9%, $4,000 at 27%, and $7,000 at 18%. Confirm the minimums of $45, $110, and $175 with each lender or card issuer, because the math uses those fixed amounts.
Second, decide which method you will actually stick with. The avalanche saves $428 and 1 month, but the snowball gives you a cleared debt by month 8. Either way, keep paying the same $500 total each month and roll any freed-up minimum into the next target.
Third, avoid new charges while you pay down these balances. The calculation assumes no new charges, so adding to a card changes the payoff order and the interest total. These are estimates that show how the math works, not financial, tax, or legal advice. Lenders, card issuers, and the IRS can calculate slightly differently, so check your own statements before relying on any payoff date.
Frequently asked questions
Why does the avalanche method pay off the 27% card before the smaller 9% loan?
The avalanche method targets the highest APR, not the smallest balance. The 27% card charges more interest each month than the 9% loan, so paying it first reduces the total interest. On these balances, that order saves $428 compared with the snowball method.
Is the snowball method ever better on these balances?
The snowball method clears the $1,500 loan by month 8, which gives an early win. But on these exact numbers it costs $428 more in interest and takes 1 month longer. The snowball is a motivation choice, not the cheaper choice here.
What happens to the minimum payments when a debt is paid off?
The calculation rolls the freed-up minimum into the extra payment on the next target debt. So your total monthly outlay stays at $500. That rollover is why the payoff speeds up after the first debt is cleared, in either method.
Do these payoff dates include new charges or changing rates?
No. The estimates assume the same $500 every month, fixed minimums of $45, $110, and $175, and no new charges. If you add charges or a rate changes, the payoff order and total interest will differ. Confirm details with your lender or card issuer.