RightFiguresTwo orders, the same minimums
Enter two to six debts and the total you can pay each month. Both orders pay every open debt up to the minimum you entered. They differ only in which remaining debt receives the rest.
The rest includes the extra, any unused part of a minimum, and the full minimum of a debt that was already paid off. After those minimums, smallest-balance-first chooses the smallest remaining balance. Highest-interest-first chooses the highest rate. A tie uses the earlier row.
The Consumer Financial Protection Bureau’s reducing-debt worksheet describes both methods, including the possibility that the snowball method costs more because it does not necessarily pay the highest rate first. This page shows the two results for the amounts you enter. It does not choose a method. Equal rates and cent rounding can make smallest-balance-first charge less interest. In a reference grid of 3,072 finished two-debt cases, that happened in 63 cases, all with equal rates, and in none whose rates differed. That grid is not a proof that a higher rate always costs more.
One debt with a fixed payment stays on the debt payoff calculator. A declining percentage minimum stays on the credit card minimum payment calculator.
A card, a car, and a student loan
Card: $1,000.00 at 0%, minimum $150.00. Car: $1,000.00 at 20%, minimum $30.00. Student: $800.00 at 5%, minimum $30.00. The monthly payment is $210.00. The combined minimums are $210.00, so the unallocated amount in month 1 is $0.00. The card pays $150.00 and closes at $850.00. The car is charged $16.67 of interest, pays $30.00, and closes at $986.67. The student loan is charged $3.33 of interest, pays $30.00, and closes at $773.33. The card stays open after month 1.
Smallest-balance-first pays Card, then Student, then Car, in 15 months. Interest is $222.06. Highest-interest-first pays Card, then Car, then Student, also in 15 months. Interest is $190.59. The difference is $31.47. The same number of months is not a recommendation.
Two equal $500.00 debts at 10% with $20.00 minimums, paid with $50.00, take 22 months and $98.48 either way. Entry order breaks the tie, so both pay Debt 1 and then Debt 2.
A balance can grow, or an order can stall
$500.00 at 0% with a $50.00 minimum, and $500.00 at 24% with a $5.00 minimum, paid with $80.00, both finish in 14 months. Smallest-balance-first interest is $113.57, and one balance increases because its payment is below that month’s interest. Highest-interest-first interest is $94.46, and no balance increases.
$1,000.00 at 20% with a $10.00 minimum, and $500.00 at 0% with a $0.00 minimum, paid with $10.00, stall in month 1 for both orders. The payment is below the $16.67 of interest, and nothing is paid on the second debt. A monthly amount below the sum of the minimums is rejected. The page does not divide that shortfall.
Frequently asked questions
Does smallest-balance-first always cost more?
No. This page does not claim that either order always wins. Compare the
interest and the months for the debts you enter.
What happens to a minimum after a debt is paid off?
That minimum stays in the amount you can apply to a remaining debt. Minimums
on this page do not shrink as the balance shrinks.
Sources & review
- Reducing debt worksheet, Your Money, Your Goals — Consumer Financial Protection Bureau
Last reviewed: . The formula is reproduced above so you can check the math independently.
Educational comparison only. Neither repayment order is a recommendation.