Snowball vs Avalanche: Which Debt Payoff Strategy Is Right for You?
Compare the debt snowball and avalanche methods. Learn which strategy saves more money and which keeps you motivated to become debt-free.
If you're tackling multiple debts, you've probably heard of two popular payoff strategies: the debt snowball and the debt avalanche. Both can help you become debt-free, but they take different approaches. Let's break down how each works and help you decide which is right for your situation.
The Debt Snowball Method
Popularized by personal finance guru Dave Ramsey, the snowball method focuses on quick wins to build momentum. Here's how it works:
- List all your debts from smallest balance to largest
- Make minimum payments on all debts
- Put any extra money toward the smallest debt
- When that's paid off, roll that payment into the next smallest
- Repeat until debt-free
Snowball Pros:
- Quick wins keep you motivated
- Simplifies your finances faster (fewer accounts)
- Psychologically rewarding
The Debt Avalanche Method
The avalanche method is the mathematically optimal approach. It minimizes the total interest you pay:
- List all your debts from highest interest rate to lowest
- Make minimum payments on all debts
- Put any extra money toward the highest-rate debt
- When that's paid off, move to the next highest rate
- Repeat until debt-free
Avalanche Pros:
- Saves the most money on interest
- Often faster total payoff time
- Mathematically optimal
A Real Example
Let's say you have three debts and can pay $1,000 total per month:
| Debt | Balance | APR | Min Payment |
|---|---|---|---|
| Credit Card A | $3,000 | 22% | $90 |
| Credit Card B | $8,000 | 18% | $160 |
| Personal Loan | $15,000 | 10% | $300 |
Snowball order: Credit Card A ($3K) → Credit Card B ($8K) → Personal Loan ($15K)
Avalanche order: Credit Card A (22%) → Credit Card B (18%) → Personal Loan (10%)
In this case, both methods would pay off Credit Card A first (it's both the smallest and highest rate). But the avalanche would tackle Credit Card B next, while snowball would too— again, same order! This happens when your smallest debts also have high rates.
When They Differ
The strategies diverge when your debts don't align. Imagine:
- A $1,000 medical bill at 0% interest
- A $15,000 credit card at 24% interest
Snowball says pay the $1,000 first for a quick win.
Avalanche says tackle the 24% card while paying minimum on the 0% bill.
The avalanche is clearly better here—you'd pay hundreds more in interest doing snowball just for the psychological win of crossing off the small debt.
Which Should You Choose?
Here's our take:
Choose Snowball if:
- • You've tried and failed to pay off debt before
- • You need quick wins to stay motivated
- • Your interest rates are similar across debts
- • The psychological boost matters more than saving a few hundred dollars
Choose Avalanche if:
- • You're motivated by math and optimization
- • You have high-interest debt (20%+ APR)
- • The interest rate gap between debts is significant
- • You're disciplined and don't need quick wins
The Bottom Line
Both methods work. The avalanche saves more money, but the snowball has higher completion rates because it keeps people motivated. The best strategy is the one you'll actually stick with.
Our recommendation: Run the numbers with our Debt Payoff Planner to see exactly how much each method costs. If the avalanche only saves a few hundred dollars, go with snowball for the motivation. If it saves thousands, the avalanche is worth the discipline.
Calculate Your Best Strategy
See exactly how much each method costs with your actual debts.
Try Debt Payoff Planner