Debt Snowball Calculator

Smallest balance first, deliberately

The snowball orders debts by balance, ignoring interest rate entirely. You pay minimums on everything and put every spare pound at the smallest balance until it clears, then roll that entire payment into the next smallest. The payment amount grows at each step, which is where the name comes from.

It costs more and works more often

Mathematically the snowball is inferior to paying highest interest first — it always costs more in total interest, sometimes substantially. Its defence is behavioural: a 2015 study in the Journal of Consumer Research found that people who tackled small balances first were more likely to eliminate their debt overall. The first account closing quickly provides visible proof the plan works, and a plan that is followed beats an optimal plan that is abandoned.

When the difference is small, take the snowball

If your debts sit within a few percentage points of each other, the interest penalty for ordering by balance is minor and the motivational benefit is real. When one debt carries a dramatically higher rate — a payday loan at triple digits against a student loan at 4 percent — the cost of ignoring the rate becomes large enough that the avalanche method is the better choice regardless of how it feels.

The rolled payment is the mechanism

Clearing a debt does not free that money for spending. The entire payment, minimum plus extra, moves to the next target. Skipping this step turns the snowball into ordinary minimum payments and the plan stops working. Automating the increased payment the day a debt closes removes the decision.

Stop adding to the pile first

No payoff plan survives continued borrowing on the accounts being cleared. Cards being paid down usually need to be removed from wallets and stored payment methods for the duration. The plan assumes the balances only move downward.