Both methods get you out of debt with extra payments. One usually saves more interest; the other builds momentum. Here’s how to choose.
Key takeaways
- Both methods pay the minimum on every debt and put extra money toward one debt at a time.
- The avalanche method targets the highest interest rate first, which usually saves the most interest.
- The snowball method targets the smallest balance first, which brings quick wins.
- The best method is the one you’ll stick with until every debt is paid.
If you have several debts, a clear payoff plan helps. Two popular strategies, the debt avalanche and the debt snowball, both rely on paying the minimum on everything and putting extra money toward one debt at a time. They differ in which debt comes first.
How they compare
| Factor | Debt avalanche | Debt snowball |
|---|---|---|
| Order | Highest interest rate first | Smallest balance first |
| Interest paid | Usually less | Usually more |
| Early progress | Slower to clear a whole debt | Quick wins as small debts disappear |
| Best for | People motivated by math and savings | People motivated by visible progress |
How the avalanche works
- List your debts by interest rate, from highest to lowest.
- Pay the minimum on every debt.
- Put any extra money toward the debt with the highest rate.
- When it’s paid off, roll that payment into the debt with the next highest rate.
How the snowball works
- List your debts by balance, from smallest to largest.
- Pay the minimum on every debt.
- Put any extra money toward the smallest balance.
- When it’s gone, roll that payment into the next smallest balance.
A quick example
Imagine three debts: a store card with a small balance and a moderate rate, a credit card with a large balance and the highest rate, and a car loan with the lowest rate.
- Avalanche order: credit card, then store card, then car loan.
- Snowball order: store card, then credit card, then car loan.
In both cases the car loan comes last, and every debt still gets its minimum payment each month.
Money tip
Whichever method you choose, write your list down and mark each payoff. Seeing progress is one of the best ways to keep going.
Before you start
- Build or keep a small emergency fund, so surprises don’t add new debt.
- Find extra money in your budget, for example by lowering your monthly bills.
- Consider whether consolidating could lower your rate. See personal loan vs. credit card.
Be aware
Be cautious with debt settlement or debt relief companies that charge upfront fees or promise to make debt disappear. The Federal Trade Commission warns consumers about these practices.
Staying on track
- Automate at least the minimum payments so nothing is missed.
- Avoid adding new balances to cards you’re paying off.
- Revisit your plan when your income or expenses change.
How to choose
- Want to pay the least interest? Choose the avalanche.
- Need early wins to stay motivated? Choose the snowball.
- Can’t decide? Some people clear one small debt with the snowball, then switch to the avalanche. Either way, comparing APRs helps you see which debts cost the most.
Common questions
Which method saves more money?
The avalanche method usually saves more in interest, because it pays down the most expensive debt first.
Why do people choose the snowball method?
Paying off small balances quickly can be motivating. For some people, that motivation is what keeps them on track.
Should I stop saving while paying off debt?
Many people keep a small emergency fund while paying off debt, so an unexpected cost doesn’t create new debt.
This article is for general information and education only and isn’t personal financial, tax or legal advice. Rates, fees and rules change, so check current details with the provider or an official source before making decisions.