Guide
Debt snowball vs. avalanche
Two popular ways to pay off debt. They share the same engine — pay every minimum, then pile your extra money onto one debt at a time — and differ on a single choice: which debt you hit first.
The debt avalanche method
With the avalanche, you order your debts by interest rate and attack the highest-APR debt first. Mathematically, this is the cheapest possible route: high-rate debt is the most expensive to carry, so killing it first stops the most interest from accruing. You'll almost always pay the least total interest and often become debt-free soonest.
The catch is psychological. Your highest-rate debt isn't always your smallest, so it can take a while before you fully clear your first debt — and some people lose steam without that visible win.
The debt snowball method
With the snowball, you order your debts by balance and attack the smallest first, regardless of rate. You clear whole debts quickly, and each payoff frees up that payment to roll onto the next debt — a snowball that grows as it rolls. The momentum and the satisfaction of crossing debts off the list are the whole point.
The trade-off: if a small debt happens to have a low rate while a big debt has a high one, you'll pay more interest than the avalanche would.
Which one should you choose?
Run your real numbers in the calculator and look at the gap between the two:
- Small interest difference? Use the snowball. The motivation is worth more than a few dollars, and you're more likely to finish.
- Large interest difference? Use the avalanche. When the math is clearly in your favor, keeping that money matters more.
- Not sure you'll stick with it? The best method is the one you actually follow. A slightly pricier plan you finish beats a cheaper plan you abandon.
What both methods rely on
The magic in either method is the rollover: when a debt is paid off, you keep paying the same total each month and redirect the freed-up payment to the next debt. If you instead pocket that money, both methods slow to a crawl. Keep the total constant and your payoff accelerates every time a debt falls. See exactly how the calculator does this math, or check the average interest rates by debt type.