Debt Avalanche vs. Debt Snowball: Which Strategy Wins?

The Two Most Popular Debt Payoff Methods

When you have multiple debts, choosing the right payoff order can save you thousands of dollars and months of payments. The two most widely recommended strategies are the debt avalanche and the debt snowball.

The Debt Avalanche Method

With the avalanche method, you make minimum payments on all debts and put any extra money toward the debt with the highest interest rate first. Once that's paid off, you roll that payment into the next highest-rate debt.

Pros:

• Saves the most money in total interest
• Mathematically optimal approach
• Reduces total payoff time

Cons:

• Your highest-rate debt might also be your largest, so early wins take longer
• Can feel discouraging if progress seems slow at first

The Debt Snowball Method

With the snowball method, you focus extra payments on the debt with the smallest balance first, regardless of interest rate. Once that's paid off, you roll that payment into the next smallest balance.

Pros:

• Quick early wins build momentum and motivation
• Psychologically rewarding to eliminate debts faster
• Simplifies your financial life sooner

Cons:

• Costs more in total interest compared to the avalanche
• Takes slightly longer to become completely debt-free

A Real-World Comparison

Let's say you have three debts:

• Credit Card A: $5,000 at 22% APR, $150 minimum
• Credit Card B: $2,000 at 18% APR, $60 minimum
• Personal Loan: $8,000 at 8% APR, $200 minimum

With $600 total monthly budget for debt payments:

Avalanche order: Card A → Card B → Personal Loan

• Total interest paid: approximately $2,800
• Debt-free in: 28 months

Snowball order: Card B → Card A → Personal Loan

• Total interest paid: approximately $3,100
• Debt-free in: 29 months

The avalanche saves about $300 and one month in this scenario. The difference grows with larger debts and wider interest rate spreads.

Which Should You Choose?

Choose the avalanche if: You're motivated by math and optimization, you have debts with significantly different interest rates, or you have the discipline to stick with a plan even when progress feels slow.

Choose the snowball if: You need quick wins to stay motivated, your interest rates are relatively similar, or you've tried paying off debt before and struggled to maintain momentum.

The best strategy is the one you'll actually stick with. Research from the Harvard Business Review suggests that people who use the snowball method are more likely to successfully eliminate their debt, even though the avalanche is mathematically superior.

Build Your Payoff Plan

Use our debt payoff calculator to compare both methods with your actual debts. See exactly how much you'll save with each approach and create a month-by-month payoff schedule.