Avalanche vs. snowball: which order actually costs less?

The two orders

Both methods work the same way underneath: pay every card's minimum, then send all of your extra money to one card until it is gone, then roll that card's payment into the next one. The only difference is which card is "next".

• Avalanche: highest interest rate first. Every extra dollar goes where it stops the most interest.
• Snowball: smallest balance first. Every extra dollar goes where it finishes a card soonest.

Three cards, $300 extra a month

The minimums are modelled the way most issuers bill them: 2% of the balance plus that month's interest, never under $25, recomputed every month as the balance falls. On top of the minimums, $300 extra goes to one card.

Avalanche costs $153.46 less in interest. Snowball hands you your first finished card in month 4 instead of month 18. And both are done in a little over two years, against twelve and a half years for minimums alone.

Why snowball finished a month sooner here

This surprises people, so it is worth being precise about. The two orders do not pay the same total each month. A card's minimum is a percentage of its balance, so under avalanche, where the big card shrinks first, the sum of minimums falls faster, and a little less money goes out each month. Under snowball the big card sits at a high balance for longer, its minimum stays larger, and more total cash leaves each month. More cash out means an earlier finish, even though more of that cash was interest.

If you held your total monthly payment fixed instead of "minimums plus $300", avalanche would win on both months and dollars. The lesson is not that snowball is faster. It is that the order matters less than how much you actually send.

The gap at other amounts

Same three cards, three different extras. Going from $200 to $500 a month cuts total interest by about $1,600 under either order. Switching orders moves it by about $150. When the rates are within a few points of each other, as they are here, that is the whole story. If one card were at 29% and another at 0% promotional, the gap would be far larger and avalanche would be the plain answer.

So which one?

• If the rates are far apart, avalanche. The interest gap is real money.
• If the rates are close and you know a finished card would keep you going, snowball. A plan you keep beats a plan you abandon in month 5, by more than $150.
• Either way, the extra goes to one card. Splitting it across all of them gives you neither the interest saving nor the finished card.
• And either way, every minimum gets paid first. A missed minimum costs more than the whole avalanche-versus-snowball gap.

What Advizel does with this

Advizel builds the payoff plan both ways and shows the real cost of each, in months and in dollars, from your own cards' balances and rates. Where your issuer reports its actual minimum, it uses that instead of the 2% model above. You pick the order. It does the arithmetic and keeps it current as balances move.