Debt
Debt Snowball vs. Debt Avalanche: Which Pays Off Debt Faster?
Educational content, not personalized financial advice. Read the disclaimer.
Two popular ways to pay off several debts are the snowball and the avalanche. They differ in one thing: which debt gets your extra money first. The math favors one, human behavior sometimes favors the other, and a worked example shows how big the gap is.
How both methods work
Both start the same way:
- Make the minimum payment on every debt so nothing goes delinquent.
- Choose one debt as the target and put every extra dollar toward it.
- When the target is paid off, add its whole payment to the next target. The payment "snowballs" as debts disappear.
The difference is the order:
- Debt snowball: target the smallest balance first.
- Debt avalanche: target the highest interest rate (APR) first.
A worked example
Three debts, with a total budget of $400 a month for debt payments (minimums add up to $280, so $120 is extra):
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Card A | $6,000 | 22% | $150 |
| Card B | $1,200 | 15% | $40 |
| Loan C | $3,000 | 9% | $90 |
Simulating month by month, with interest added each month on each balance, the results are:
| Method | Payoff order | First debt gone | Debt-free | Total interest |
|---|---|---|---|---|
| Snowball | B, then C, then A | Month 8 | Month 33 | $2,983.67 |
| Avalanche | A, then B, then C | Month 29 | Month 32 | $2,519.21 |
In this example the avalanche saves $464.46 in interest and finishes one month sooner. That's because it goes after the 22% card first, so less of your money goes to expensive interest. The snowball, though, knocks out its first debt in month 8, while the avalanche needs until month 29 for its first win.
So which one should you choose?
- The avalanche wins on math whenever the highest-rate debt isn't also the smallest. The bigger the gap between rates, and the larger the high-rate balance, the more it tends to save.
- The snowball wins on motivation for some people. Seeing debts disappear early can help you stick with the plan. A method you finish beats a better method you abandon.
- If your smallest debt is also your highest-rate debt, both methods are identical.
These numbers come from one example. Your balances, rates and payments will give a different gap, and you can test them with the calculator below for a single debt.
Things to keep in mind
- Always pay at least the minimum on every debt. Missing payments can cost late fees and hurt your credit. See how credit scores are calculated.
- Stop adding new debt while you pay it off, or the balance you're chasing keeps growing.
- Keep a small emergency cushion so a surprise doesn't put you back on the card. See how much to keep in an emergency fund.
- Know your true rates. Cards usually quote APR, and interest may be calculated daily. See APR vs. APY.
Educational content, not personalized advice. The example is hypothetical and simplified: it assumes fixed rates, no new charges and no fees. Your lender's statements are the final word on what you owe.