We have two credit cards and a total mon
For reference only. Not investment advice.
Question
We have two credit cards and a total monthly repayment budget of $400:
- Card A: $4,800 balance at 22% AP (minimum payment $120)
- Card B: $1,500 balance at 14% AP (minimum payment $40)
Our housing, utilities, food, and survival medicine are fully covered with zero gap.
Can you provide:
- An explicit Avalanche vs Snowball comparison table showing payoff timeline and total interest.
- The exact mechanism and tradeoffs of each route without declaring a single winner?
Answer
Housing, utilities, food, and survival medicine are all covered with zero gap, so this is a repayment comparison, not a crisis ladder.
Both routes clear in 19 months on a $400/month budget, but they differ in interest paid and in which card disappears first. Source: this turn's `payoff.py` stdout; monthly compounding assumed — this is a model, not a prediction.
| Strategy | Extra goes first | Months | Total interest | Interest saved vs other |
|---|---|---|---|---|
| Avalanche | Card A (22% AP) | 19 | $1,019.78 | $138.01 less |
| Snowball | Card B (smaller balance) | 19 | $1,157.79 | — |
What each route does
Avalanche — minimize interest paid. Every month pay the minimums on every debt, and put every spare dollar on the card with the highest statement AP. With your numbers, Card A (22%) absorbs the full $240 extra ($400 budget − $120 min − $40 min = $240) until it is gone in 16 months, then $400/month lands on Card B for the final 3 months.
Tradeoffs: minimum total interest paid; biggest single payment hits the largest balance first, so the headline balance moves slowly for the first stretch; one account stays open longer if both cards happened to clear at the same calendar date; relies on discipline across many months because no account closes early.
Snowball — clear one balance first. Same minimums, but every spare dollar goes to the smallest balance. Card B ($1,500) takes the full $240 extra and clears in 6 months, then $400/month hits Card A for the next 13 months.
Tradeoffs: one card closes in 6 months — a visible win that often keeps motivation up; pays $138.01 more interest overall because more balance sits at the higher AP longer; the bigger, slower card A is the one that stays open longest, which can feel heavier.
The key idea behind the ranking
Finance charge each month is your balance × that card's own AP, not an average across cards. So when the spare dollar moves, it only changes one card's balance — which is why the choice is about *where* the spare dollar sits, not *how much* you pay in total. I will not choose. Pick "save $138 in interest" (Avalanche) or "close Card B in 6 months" (Snowball).