In this example both finish in the same month, month 27. Paying the highest rate first (the avalanche) costs 2,813 in interest; paying the smallest balance first (the snowball) costs 2,971, which is 158 more. The snowball clears its first debt in month 5; the avalanche clears its first in month 15.
Both pay every minimum each month and put everything else on one debt. When a debt is cleared, its minimum moves to the next one, so the amount going to the target grows over time. The two differ only in the order they aim at the debts.
The three debts
Each month pays every minimum plus 300:
| Debt | Balance | Yearly rate | Minimum | Cleared in month (avalanche) | Cleared in month (snowball) |
|---|---|---|---|---|---|
| Store card | 1,500 | 15% | 45.00 | 17 | 5 |
| Credit card | 6,000 | 24% | 180.00 | 15 | 17 |
| Personal loan | 9,000 | 11% | 200.00 | 27 | 27 |
The two orders side by side
The same debts and the same monthly total in both rows:
| Order | Months to clear everything | First debt cleared in month | Total interest | Total paid |
|---|---|---|---|---|
| Highest rate first (avalanche) | 27 | 15 | 2,813 | 19,313 |
| Smallest balance first (snowball) | 27 | 5 | 2,971 | 19,471 |
What the example leaves out
Here the gap in interest is 158. With rates further apart, or a larger balance on the highest-rate debt, it can be much wider. The example assumes fixed rates, no new borrowing and no fees.