Debt Avalanche Calculator

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Debt #1

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Debt #2

Debt #3

Debt #4

Debt #5

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Debt #6

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Total debt

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Table of Contents

1

What is Debt Avalanche?

The debt avalanche method directs required payments to every debt and focuses any available extra payment on the highest interest rate. After that balance is cleared, its payment rolls to the next-highest rate. The aim is to reduce interest cost, assuming payments are made as planned and debts do not add new charges.

This page accepts two to six balances, annual percentage rates and monthly payments. It simulates interest monthly, orders debts by rate and reports an estimated payoff term, total paid and total interest. It is a planning estimate. Actual lenders may calculate interest daily, apply fees, use promotional rates or set different payment rules.

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How to Use This Calculator

  1. Select the number of debts, from two through six.
  2. For each debt, enter its current balance, annual interest rate and planned monthly payment.
  3. Use one currency for every balance and payment; the page does not convert currencies.
  4. Select Calculate. Debts are sorted from highest rate to lowest.
  5. The simulation adds one month of interest, makes each payment, and rolls payments from cleared debts toward the current highest-rate balance.

The total monthly amount is the sum of entered payments. In the first month there is no separate extra amount unless the entered payment structure already includes one. When a debt disappears, its former payment becomes available to the first debt remaining in rate order. The simulation stops when all balances are paid. If the plan cannot clear every balance within the 600-month safety horizon, the calculator asks for higher payments instead of reporting a payoff term.

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Formula Used

Monthly interest = current balance × (annual rate ÷ 100) ÷ 12

New balance = current balance + rounded monthly interest − payment

Weighted average APR = Σ(balance × APR) ÷ Σ(balance)

Each payment is capped at the amount then owed. Total interest is reported as total simulated payments minus original balances. This monthly approximation does not model daily compounding, fees or changing rates.

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Variables Explained

Input or outputMeaning
BalanceAmount currently owed on a debt.
Interest rateEntered annual percentage rate used as APR divided by 12 each month.
PaymentPlanned monthly amount assigned to that debt before rollover.
Total monthly paymentSum of all entered payments, intended to remain available as debts close.
Payoff termNumber of simulated monthly cycles until payoff, subject to the calculation cap.
Total interestTotal simulated amount paid minus starting principal.
Effective APRA page-specific annualized ratio of total interest to balance and simulated years, not a lender disclosure APR.
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Worked Example

Assume debt A has a 1,000 balance at 18% APR with a 100 monthly payment, and debt B has a 2,000 balance at 8% with a 100 payment. The first month adds 1,000 × 0.18 ÷ 12 = 15 interest to A and 2,000 × 0.08 ÷ 12 = 13.33 to B. After payments, balances are 915 and 1,913.33.

The 18% balance remains first in the avalanche. Once it is paid, its 100 payment rolls onto debt B, making up to 200 available each month. Exact output depends on monthly rounding and the final capped payment. Compare the schedule with lender statements before adopting it.

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Why Use This Calculator?

A shorter term and lower total interest can help compare a proposed payment budget, but the estimate is credible only if each payment covers accruing interest and required minimums. If payments are too small to clear every balance within 600 months, the calculator returns a validation message rather than presenting the capped run as a payoff.

The displayed weighted APR summarizes starting balances, while “effective APR” is a custom retrospective ratio. Neither replaces the APR and disclosures on a credit agreement. Every balance and payment must use the same selected currency, which is carried through to the results. The calculation does not perform exchange-rate conversion.

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Common Mistakes

    • Mixing currencies among debts and payments.
    • Entering a payment that does not cover monthly interest.
    • Assuming APR divided by 12 exactly matches a lender’s daily-interest method.
    • Continuing to borrow on an account during the payoff plan.
    • Ignoring late fees, annual fees, promotional expiration and rate changes.
    • Calling the page’s effective APR a regulatory disclosure APR.
    • Ignoring the validation message that appears when the entered payments cannot produce payoff within 600 months.
    • Choosing avalanche without maintaining required minimum payments on every debt.
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Frequently Asked Questions

What is the difference between avalanche and snowball?

Avalanche targets the highest rate first to reduce cost. Snowball targets the smallest balance first to create earlier account closures.

Should I stop minimum payments on lower-rate debts?

No. Continue all required minimums and direct only the available extra amount to the highest-rate target.

Why can the lender payoff differ?

Lenders may accrue interest daily, assess fees, change rates and use statement-specific payment rules that this monthly model does not reproduce.

What if a payment is below monthly interest?

The balance grows rather than falls. Increase the payment or seek qualified assistance; a capped simulation may otherwise end with unpaid debt.

Can I enter debts in any order?

Yes. The calculation sorts them by rate. When rates tie, the page does not provide a separate tie-breaking strategy.

Does the calculator choose a currency?

It does no exchange-rate conversion. Enter every balance and payment in one currency and interpret the amount labels cautiously.

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Sources & References

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