Canada
Debt Payoff: Snowball vs Avalanche
Snowball pays off the smallest balance first, for quick wins. Avalanche pays off the highest interest rate first, which saves the most money. See exactly how far apart they are for your debts.
How it works
Every month, each debt gets its minimum payment. Whatever is left of your budget goes to one target debt: the highest APR (avalanche) or the smallest balance (snowball). When a debt is paid off, its minimum rolls into the next target. Interest is charged monthly at APR ÷ 12. Credit cards actually compound daily, so real interest is a little higher.
Which should you pick?
Avalanche always costs the same or less. Snowball can be easier to stick with because the first debt disappears sooner. If the difference below is small, pick the one you'll stick with. Also look at lowering the rate itself: a lower-rate consolidation loan or balance transfer can beat both. Watch the fees and the promo-rate end date.
What to do next
Debt consolidation loan
One lower-rate payment can beat both methods. [Partner link: loan marketplace]
Compare loans →Balance-transfer card
A low promo rate on card debt (check the fee). [Partner link: card comparison]
Compare cards →Non-profit credit counselling
Free help if the minimums are already too much. [Partner link: credit counselling]
Get help →Sources & assumptions
This is an estimate. Lenders calculate interest and minimum payments in different ways. NorthNumbers isn't affiliated with any bank, lender, dealer or government agency. Nothing here is financial, tax or legal advice.