Canada Debt Payoff Calculator

Worked example

Take the two debts loaded in the form: $5,000 at 20 percent APR (a credit card) and $10,000 at 10 percent APR (a line of credit), with $500 a month available across both. Avalanche orders by interest rate, so it throws every spare dollar at the 20 percent card first while paying the line of credit its minimum. Snowball orders by balance, attacking the smaller $5,000 debt first. Here the smaller balance also happens to be the higher rate, so both strategies target the same debt in the same order. They each clear all $15,000 in about 36 months and rack up roughly $2,667 in total interest, a tie. The gap only opens when a large balance carries the highest rate. If the $10,000 line of credit were the 20 percent debt instead, avalanche would hit it first and save a few hundred dollars of interest, while snowball would still chase the small balance for the early psychological win.

How it is calculated

The tool runs a month-by-month simulation for each strategy. Every month it adds one twelfth of each debt’s annual rate as interest, then applies your full monthly payment, directing the leftover after minimums to the target debt the strategy prioritises. Avalanche sorts debts by interest rate from highest to lowest, which is the order that minimises total interest paid. Snowball sorts by balance from smallest to largest, which clears individual debts faster and builds momentum even though it can cost slightly more interest. The simulation repeats until every balance reaches zero and reports the months elapsed and the interest accumulated. Because both methods use the same total payment, the difference between them is purely the order of attack, and that difference is largest when your highest-rate debt is also a large balance. The footnote about CRA debt is a real caveat: tax debt compounds daily at a higher prescribed rate, so it usually deserves priority over consumer debt regardless of which strategy you choose.