Debt Snowball vs. Debt Avalanche: Which Should You Use?

Both methods work the same way until one decision. You pay the minimum on every debt, then put all your extra money toward a single target debt. When that debt is gone, you move its whole payment to the next one. The only difference is how you pick the target.

The debt snowball method

You target the smallest balance first, whatever the interest rate.

Pros

• You clear debts quickly at the start, and early wins help many people keep going.
• You close accounts sooner, so there are fewer bills to track.
• The rule is simple to follow.

Cons

• It usually costs more in interest, because an expensive debt may wait its turn.
• It can take a little longer to become debt free.

The debt avalanche method

You target the highest interest rate first, whatever the balance.

Pros

• It usually gives the lowest total interest.
• It is often the fastest route to zero.

Cons

• The first target may be a large balance, so your first win can take many months.
• That wait makes it easier to lose motivation.

How big is the difference?

It depends on your debts. In the example loaded in our calculator, with four debts and an extra $200 a month, both methods finish in 41 months, but the avalanche costs about $270 less in interest. When your highest rates sit on your smallest balances, the two methods give almost the same result.

When to use each

Choose the snowball if you have several small debts, you have struggled to stick with plans before, or you need quick progress to stay motivated.

Choose the avalanche if you are comfortable waiting for results, one or two debts carry much higher rates than the rest, or your main goal is paying as little interest as possible.

Can you mix the two?

Yes. Some people start with the snowball to clear one or two small debts fast, which builds confidence and frees up cash, then switch to the avalanche for the rest. Others use the avalanche but give a very small balance a quick payoff because it removes a bill they dislike. A mixed plan costs a bit more interest than a pure avalanche, but it is a perfectly reasonable trade if it keeps you on track.

The best method is the one you will keep doing. Whichever you pick, make every minimum payment on time and try not to add new debt while you pay the old debt down.

This article is general information, not financial advice. Your own situation, including fees and rate changes, may call for a different approach.