Debt Snowball vs. Debt Avalanche: Which Payoff Strategy Is Right for You?

Here’s a common scenario: you’ve got multiple debts — credit cards, personal loans, maybe even an auto loan — and their interest rates and balances are piling up. Figuring out how to lift that financial weight off your shoulders can feel overwhelming. Two popular DIY debt payoff methods, the debt snowball and the debt avalanche, offer clear strategies to tackle your debt head on.

Both approaches can help you get out of the red, but they take different paths to the finish line. The following guide explores how each one works and the pros and cons of both methods, so you can decide which is right for you.

What is the debt snowball method?

The debt snowball method is a repayment strategy where you pay off your debts in the order of smallest to largest balance, regardless of interest rate.

With this method, you make minimum payments on all your debts and put any extra money toward the smallest debt. Once that first low balance is paid off, you take the money you were using to repay that debt and use it to focus on your next smallest debt, and so on, creating a "snowball" effect.

Many people who use the debt snowball method track their progress using a spreadsheet. This not only keeps you organized but can also be a source of motivation as you mark off your payments.

How to apply the debt snowball method

Let’s say you have $1,200 you can afford to put toward debt payoff each month and you’re dealing with the following debts:

Using the debt snowball method, the idea would be to pay off credit card 2 first because it’s the smallest of the four debts. You would make all your minimum monthly payments and then send any leftover money to that $2,000 card.

This is roughly what the process would look like:

• First, you add up all the minimum payments ($260 + $60 + $250 + $300 = $870)
• Then, subtract the sum of the minimum payments from your $1,200 repayment budget ($1,200 - $870 = $330).
• Lastly, take that remaining $330 and subtract them from credit card 2’s debt. At 22.99% interest, you would finish repayment in six months.

After paying off that first card balance, you would then tackle the auto loan while continuing to pay the minimum payments on your other credit card and student loan. You’ll now have an extra $390 a month since you paid off the card with the $60 monthly payment. When the car loan is paid off, you'll say goodbye to that second credit card. Finally, all $1,200 will go to wiping out the student loan.

Assuming you don’t fall off track, you’ll pay off all four accounts in three years.

What is a debt avalanche?

A debt avalanche calls for paying off your debt from the highest to lowest interest rate, regardless of the balances or the types of debt you have.

The idea is to make minimum payments on all debts and then put any extra cash toward paying down the most expensive debt — that’s the one with the highest rate. Once you pay off that first debt, you take that money and put it toward the next highest interest rate and keep working through your debts.

Because you pay off your higher-interest debts first, you pay down your debts faster since you're saving on interest that can go toward the principal.

How to apply the debt avalanche system

Here is how a debt avalanche repayment plan would work. (The following example uses the same numbers and loans used for the debt snowball method.)

With the debt avalanche payoff method, you get rid of the debt with the highest interest rate first. This means the 24.99% interest rate credit card would be the first one you pay down while making minimum payments on your other three debts. Then, you would focus on paying off the 22.99% credit card, which has the second highest interest rate on the table.

With just your two low-interest loans remaining, you next pay off your auto loan and finally knock out the student loan. Compared to the debt snowball method, you would still be debt-free in three years, but you’d be saving $997 in interest.

Debt snowball or debt avalanche — which is best for you?

To determine which approach is best for you, you need to decide whether knocking out individual debts or watching your monthly interest decrease will motivate you more. Start by crunching the numbers on both methods. You can find a "debt snowball vs. avalanche" calculator online that will do the math for you and provide a payoff schedule for each method.

That said, numbers don’t tell the whole story. Paying off high-interest debts will always seem like the better choice if you’re just looking at the interest saved, but you have to consider your behavior and what will motivate you, too.

You might want to consider the debt snowball method if:

1. Your budget is tight, and clearing smaller debts will free up funds for other needs
2. You need the motivation of a strategy that is emotionally rewarding in the short-term
3. You want to reduce your number of accounts quicker

Alternatively, you might get the most out of a debt avalanche plan if:

1. Your primary goal is to save the most money on interest
2. You can stay motivated without needing quick wins
3. You’re focused on long-term savings

Another common repayment strategy is to combine the two methods. Get a few quick wins using a debt snowball, then switch to the avalanche method to save on those bigger debts. This is sometimes called a debt blizzard.

Tips for success with a debt snowball or debt avalanche plan

While the snowball and avalanche methods approach debt repayment differently, there are some common things to expect when using either of these debt repayment strategies.

Don't keep adding to the credit card balance

Neither the snowball nor the avalanche method will improve your financial situation if you continue adding to your credit card debt. This will likely require some tough budgeting decisions, and if you’re hit with unexpected expenses, you may even need to slow down your payoff schedule so you can divert money without taking on new debt.

Be prepared to adjust your plan

Even the best-laid debt repayment plan might need to be updated over the course of your debt journey. Variable interest rates change, or perhaps you have to cover an emergency using your smallest balance card.

If necessary, reorder your debts or change methods if you find it challenging to stick with your chosen repayment strategy. As long as you course correct when you fall off track, you shouldn’t beat yourself up about making changes to your plan.

Don’t overlook other debt payoff strategies

The debt snowball and debt avalanche methods are great repayment strategies, but don't forget about other solutions that can also be useful.

If keeping up with all those minimum payments is too much, you might want to consider debt consolidation, a process that combines all your debts into a single loan with one monthly payment. Consolidation is only a good option for some people — namely, those with a good credit score and a stable income — so be sure to research and compare the best debt consolidation loans.

A debt counselor or other financial professional can also advise you on how to negotiate with debt collectors and suggest the best repayment solution for your situation. Finally, if you’re struggling to make even your minimum payments, you can also look into working with a debt relief company. These companies work to negotiate settlements with your creditors in exchange for a fee, typically based on a percentage of what you owe.

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