If you have several debts, the order you pay them off changes how much interest you pay and how long it takes. The two best-known strategies are the avalanche and the snowball.
The two methods
With both methods, you pay the minimum on every debt and put every extra dollar toward one target. When that debt is gone, you roll its payment into the next one.
- Avalanche: target the debt with the highest interest rate first. This is mathematically the cheapest.
- Snowball: target the smallest balance first. You get quick wins that keep you going.
Side-by-side example
Imagine three debts and a total budget of $700 a month:
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Personal loan | $2,500 | 9% | $75 |
| Credit card A | $5,000 | 24.99% | $125 |
| Credit card B | $8,000 | 21.99% | $200 |
- Avalanche: time to debt-free
- 2 yr 4 mo
- Avalanche: total interest
- $4,014
- Snowball: time to debt-free
- 2 yr 5 mo
- Snowball: total interest
- $4,630
- Avalanche saves
- $616
The snowball pays off the small personal loan first for a quick win, while the avalanche attacks the 24.99% card. Going avalanche saves $616 here and finishes 1 mo sooner. The gap grows with larger balances and bigger differences in interest rates.
Which should you choose?
If you’re disciplined and motivated by numbers, the avalanche saves the most. If you’ve tried before and lost steam, the snowball’s early wins can be worth a little extra interest. The best method is the one you stick with.
Make either method work
- Stop adding new debt. Neither method works if balances keep growing.
- Automate the payments. Set up autopay for every minimum so you never miss one.
- Look for lower rates. A 0% balance transfer or a lower-rate personal loan can speed things up.
- Put windfalls to work. Tax refunds and bonuses can knock out a whole debt at once.