Highest interest rate or snowball?
Keep every minimum payment, roll freed payments forward, and compare the two repayment orders using the same monthly debt budget.
By the SterlingCat editorial team · Last updated 2026-08-02 · Calculated in your browser
The key points
- The highest interest rate method directs extra money to the costliest open debt.
- The snowball method directs extra money to the smallest open balance.
- Both plans keep the same total monthly debt budget, so the comparison isolates repayment order.
How we calculate this
Each month, the model adds one-twelfth of each debt’s annual rate, pays every listed minimum, and sends the rest of the fixed monthly debt budget to the current target. When a debt is repaid, its former minimum remains in the budget and moves to the next target.
The two methods
The Consumer Financial Protection Bureau calls the rate-first strategy the highest interest rate method. It targets the open debt with the highest annual rate. The snowball method targets the smallest open balance. The result shows the interest and time difference rather than assuming one motivation fits everyone.
What is excluded
Rates are held constant. Fees, new borrowing, promotional-rate expirations, daily-balance calculations, and lender-specific payment allocation are excluded. Confirm the result against each agreement before changing payments.
Sources
Grounded in authoritative primary sources:
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