If you have more than one debt, the order you pay them off matters. The two best-known strategies are the debt snowball and the debt avalanche. Both work. They just reward you in different ways.
How both methods start
With either method you do the same three things:
- List every debt with its balance, interest rate (APR) and minimum payment.
- Pay the minimum on every debt, every month, so nothing falls behind.
- Put any extra money you can find toward one debt at a time.
When that debt is paid off, its payment "rolls over" to the next debt in line. Your payments get bigger as you go, which is why both methods speed up over time.
The debt snowball: smallest balance first
With the snowball, you put your extra money toward the debt with the smallest balance, no matter the interest rate.
- Why people love it: you clear your first debt quickly. That early win is motivating, and motivation is what keeps most people going.
- The trade-off: you may pay a bit more interest, because a big high-rate debt can wait in line.
The debt avalanche: highest interest rate first
With the avalanche, you put your extra money toward the debt with the highest interest rate.
- Why people love it: it's mathematically the cheapest. You attack the most expensive debt first, so you pay the least interest overall.
- The trade-off: if your highest-rate debt is also large, your first win can take a while.
A simple example
Imagine three debts and $300 extra per month on top of the minimums:
- Store card: $1,150 at 27%
- Credit card: $4,200 at 25%
- Car loan: $14,800 at 7%
The snowball pays the store card first, then the credit card, then the car loan. The avalanche pays the store card first too (it has the highest rate), then the credit card, then the car loan. Here both orders are the same, so the result is the same.
The methods only differ when a small debt has a low rate, or a big debt has a high rate. In many real-life debt lists the difference in total interest is smaller than people expect, often a few hundred dollars, while the difference in motivation can be huge.
Which one should you choose?
- Choose the avalanche if you're driven by numbers and want to pay the least interest.
- Choose the snowball if you need quick wins to stay on track, or if you've tried before and lost steam.
- Not sure? Compare both on your own numbers and pick the one you'll actually stick with. The best method is the one you finish.
Compare both on your own debts
Our Debt Payoff Planner for Excel and Google Sheets does the math for you. Enter your debts once and it shows your debt-free date, total interest and a month-by-month plan for both the snowball and the avalanche, side by side, plus how much you save compared to paying minimums only.
Quick tips that help with either method
- Always pay every minimum on time. Late fees undo your progress.
- Stop adding new debt while you pay off the old.
- Look for a small extra amount each month. Even $50 changes your debt-free date.
- Track every payment. Watching balances fall is the best motivation there is.
This article is for general information only and isn't financial advice.