Debt Payoff Calculator — Snowball vs Avalanche (Canada)
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Plan a multi-debt payoff strategy. Compares the snowball method (pay smallest balance first) vs avalanche (pay highest APR first) for the same monthly budget. Outputs months to debt-free and total interest paid under each method. Monthly compounding (the standard for credit cards, lines of credit, and consumer debt).
Two well-known methods for paying off multiple debts at once. Both pay the minimum on every debt every month; the difference is where the EXTRA money goes.
- Avalanche — extra goes to the highest-APR debt until it's cleared, then rolls to the next-highest. Mathematically optimal — minimises total interest paid.
- Snowball — extra goes to the smallest-balance debt until it's cleared, then rolls to the next-smallest. Sub-optimal mathematically, but the quick wins have a measurable behavioural advantage for some people.
The calculator runs both methods on the same inputs and shows the difference in months and total interest. Pick the method that fits both your math and your psychology.
How this calculator works
Each month, for each debt:
interest = balance × (apr ÷ 12)
balance = balance + interest − payment
Payment allocation: minimums first across all debts, then EXTRA goes to the priority debt (smallest balance under snowball, or highest APR under avalanche). When a debt clears, its allocated payment rolls to the next priority debt.
Monthly compounding (standard for non-mortgage Canadian consumer debt). For mortgage payoff, use the Mortgage Payment calculator which handles semi-annual compounding.
Worked example
Three debts: $8,000 credit card at 19.99% (min $200), $12,000 line of credit at 8.99% (min $150), $18,000 car loan at 6.99% (min $350). Total minimums $700/mo. Budget $900/mo (extra $200/mo).
- Avalanche ($200 extra goes to credit card first): credit card clears month ~25, LoC clears month ~75, car loan clears month ~63. Debt-free month ~75. Total interest ~$13K.
- Snowball ($200 extra goes to credit card first since it's also the smallest balance — same as avalanche here): identical result. The methods only diverge when smallest-balance and highest-APR are different debts.
Run the calculator above for the precise numbers and adjust to your real debts. The methods diverge meaningfully when, e.g., you have a small low-rate student loan ($3K @ 5%) alongside a large high-rate credit card ($15K @ 21%) — snowball would clear the $3K student loan first (psychological win), avalanche would attack the $15K credit card first (math win, often by years).
Frequently asked questions
Snowball vs avalanche — which actually wins?
Avalanche always pays less total interest mathematically — it attacks the highest-APR debt first, so the most expensive interest is shut off soonest. Snowball pays more interest but offers behavioural wins: clearing small balances quickly creates momentum that helps people stick with the plan. Several behavioural-finance studies (notably Gal & McShane 2012) found snowball-completers more likely to clear all debts than avalanche-starters, even though avalanche is theoretically optimal. The calculator shows both numbers so you can pick based on your own self-knowledge.
Why monthly compounding instead of semi-annual?
Canadian mortgages compound semi-annually by federal law (Interest Act of Canada s. 6). All other consumer debt — credit cards, lines of credit, personal loans, car loans, student loans — uses monthly compounding by industry convention. The calculator handles the latter; for mortgage scenarios use the Mortgage Payment calculator.
What if my monthly budget is less than the sum of minimums?
The calculator returns an error. You can't avoid arrears with a budget below the sum of minimum payments. If that's your reality, the actionable next step is contacting a non-profit credit counselling service (look for accredited members of Credit Counselling Canada) — they negotiate with creditors to reduce minimums or interest, and can help with consumer proposal or bankruptcy paperwork if those become necessary. Calculators don't help with insolvency.
Does this account for variable rate changes?
No. The APR you enter is treated as fixed for the entire payoff horizon. Credit card rates rarely change without notice, but lines of credit (HELOC, personal LoC) move with prime, and the Bank of Canada has changed prime several times in any given year recently. For a longer payoff horizon (>3 years) on a variable-rate debt, run the calculator under both 'today's rate' and 'rate +2%' to bound the outcome.
Sources
Every figure on this page traces back to a primary Canadian authority. See the complete sources index for the master list.
Verified against Standard amortization arithmetic; cross-check vs major-bank debt payoff illustrations on .
Important
This calculator is for informational purposes only. It is not financial, tax, mortgage, or legal advice. Tax rates, mortgage rules, and contribution limits change. Always verify current rules with the relevant Canadian authority and consult a licensed professional before making financial decisions.