Debt Snowball vs. Avalanche: Which Can Help You Bury Your Debt?

Congratulations — you’ve made the decision to get out of debt, and now you’re wondering about the best debt repayment strategy for you. Fortunately, you have plenty of options to choose from, including the popular debt snowball and debt avalanche methods.

Both of these options can help you stay focused on your goal of becoming debt-free. But as you figure out how to pay off debt, you might find one strategy fits your lifestyle and financial situation better than the other.

To help figure out the best way to meet your financial goals, let’s compare the debt snowball vs. avalanche methods.

What is the debt snowball method?

The debt snowball method is a repayment strategy that focuses on paying off your debt from the smallest amount to the largest. This method aims to pay off one balance as quickly as possible and then move on to the next smallest debt. As you pay off one balance, you should have additional funds to put toward the next debt in line, following the process until you’re completely out of debt.

This strategy doesn’t involve ignoring all your debts apart from the one you’re focused on paying off. Instead, you typically pay the minimum monthly payments required and then put any extra money toward the smallest debt.

Let’s say this is your debt situation, ordered based on account balance:

• Credit card #2: $3,000 balance
• Student loan: $4,000 balance
• Credit card #1: $5,000 balance
• Car loan: $9,000 balance

Using the debt snowball method for this example, you would pay the minimum required amount on all four debts and then put any extra funds you have toward the balance on credit card #2 because it’s the smallest balance. Once you pay off that credit card balance, you will move on to putting that extra toward your student loan. From there, it’s credit card #1 and then your car loan.

“If staying motivated to pay off debt is your biggest obstacle, I'd suggest you look at the snowball strategy,” says Taylor Jessee, CPA, CFP, and Director of Financial Planning for Taylor Hoffman. “The snowball strategy is the most rewarding because you will wipe out entire loan balances more quickly than with other methods. Seeing loans paid off in full gives you that psychological boost to continue paying off all debt.”

The debt snowball method is typically best if you want an easy-to-understand approach that gives you quick wins and helps keep you motivated.

Pros of the debt snowball method

Here are a few pros of the debt snowball method:

• Easy to understand: This debt repayment method isn’t difficult to comprehend or implement because there’s not too much involved in the process. Simply make sure you’re paying the minimum amount on all your debts and then put extra funds toward your smallest debt. No heavy calculations involved.
• Proven strategy: This is one of the most popular debt repayment strategies because it’s simple and works if you stick with it.
• Quick wins: Paying off your smallest balances can give you quick wins, motivating you to keep working toward your financial goals. If you can see yourself making progress, you might be more likely to accomplish your goal of paying off your debts.

Cons of the debt snowball method

Here are a few cons of the debt snowball method:

• Doesn’t account for interest: Choosing to pay off your smallest balances first doesn’t account for the interest rates on any of your debts. Unfortunately, your smallest balances might not always have the highest interest rates, which means your other debts could be racking up hefty interest charges while you focus on something else.
• Longer time to pay off debt: If you aren’t focused on paying off your high-interest debts first, you’ll likely take more time to pay off your overall debt. Any balance with high interest will continue accumulating more interest, and the resulting balance may take longer to pay off.
• Not a universal plan: This type of strategy won’t work for everyone. The point is to put additional funds toward your smallest debts first. But those extra funds have to come from somewhere, which likely means budgeting more effectively or earning more money.

What is the debt avalanche method?

The debt avalanche method is a type of debt repayment strategy focused on paying off high-interest-rate balances first. After you pay off your balance with the highest interest rate, you move on to the debt with the next highest interest rate.

The point of this method is to get rid of your most expensive debt as quickly as possible, which can decrease how much you pay toward your debts in the long run. Remember that you’ll still typically make the minimum required payment on all your balances and then put any additional funds you have toward the debt with the highest interest rate.

Let’s say this is your debt situation, ordered based on interest rate:

• Credit card #2: $3,000 balance and 25% interest rate
• Credit card #1: $5,000 balance and 18% interest rate
• Car loan: $9,000 balance and 10% interest rate
• Student loan: $4,000 balance and 5% interest rate

Using the debt avalanche method for this example, you would pay the minimum required amount on each debt and then put additional money toward the credit card #2 balance because it has the highest interest rate. Once that balance is paid off, you move on to paying off the balance for credit card #1. From there, it’s your car loan and then your student loan.

“One pro of the debt avalanche method is that mathematically, you'll save more on interest by paying off your higher interest rates first,” says Steffa Mantilla, a certified financial education instructor (CFEI) and founder of Money Tamer. “If you want to pay the least amount of money in interest, the debt avalanche method is the way to go.”

This type of debt payoff strategy is typically best if you want an easy-to-understand method that focuses on saving you the most money over time.

Pros of the debt avalanche method

Here are a few pros of the debt avalanche method:

• Potential to save more money: Since your focus is paying off your high-interest debts first, you could quickly cut down your overall interest payments. Over time, this type of strategy might save you more money compared to other repayment strategies.
• Possibly quicker: If you pay off your most expensive debts first, you might have smaller amounts of interest accruing over time. This means you could end up with more money to put toward paying off your balances, and you might get out of debt quicker compared to some other repayment methods.
• Easy to understand: You make the minimum required payment on all your debts and then put additional money toward the debt with the highest interest rate — and that’s basically it.

Cons of the debt avalanche method

Here are a few cons of the debt avalanche method:

• Could require more discipline: Paying off your debts with the highest interest rates first could mean tackling your biggest balances right from the start. Sticking with this strategy may require a lot of discipline and self-motivation because progress may seem slower.
• Not a universal plan: This type of strategy isn’t the best for everyone. This includes if you don’t have enough money to make the minimum payments on all your debts or the extra funds to implement this strategy. If this is the case, it might make sense to consider other options, such as refinancing, if your credit card debt or other debt is difficult to tackle.
• More stressful: Debt can be stressful, including if you’re trying to pay it off. This type of strategy isn’t the most stress-relieving method because you’re tackling some of your most difficult debts first.

Debt snowball vs. debt avalanche: 3 key differences

Here are three key differences between the debt snowball and debt avalanche methods:

1. Your debt focus

“In both methods, you’d list all debts and payment amounts,” says Jamilah N. McCluney, financial advisor at Black Wealth Financial. “If using the debt snowball, you’d list all debt in order from smallest to largest balance, and with debt avalanche, you’d list in order from largest to smallest interest rate.”

While you’ll make a list with both strategies, the debt snowball method focuses on paying off your debts with the smallest balances first. In contrast, the debt avalanche method focuses on paying off your highest interest debt first. Both methods are designed to help you pay off debt, but they go about it in different ways. Depending on your situation, you might prefer one method over the other.

2. Your motivation

It’s not always easy to stay motivated while trying to pay off your debt. The debt avalanche method is designed to help you save money over time, but it also tackles some of your most difficult debts first. This can be intimidating and demoralizing if you don’t start seeing quick progress.

On the other hand, the debt snowball method targets your small debts, leading to quick wins and big boosts of motivation.

3. Your potential savings

The debt avalanche method is typically better than the debt snowball method when it comes to saving money. This is because you’re targeting the balances with the highest interest rates first, which are likely your most expensive debts. Getting rid of those first can significantly reduce your overall debt, and you might also get out of debt quicker.

FAQs about debt snowball vs. debt avalanche

Bottom line

Whether the debt snowball vs. avalanche method is better for you depends on your personal finance situation. Overall, you’re likely to save more money with the debt avalanche method, but the debt snowball could work for you if it keeps you motivated.

For another way to help you tackle your debt, consider using a personal loan for debt consolidation. This strategy can keep all your debt in one place, which helps to simplify your debt repayment efforts. In addition, a balance transfer could also help you get your debt under control by helping you save on interest charges. For more details, check out our list of the best balance transfer cards.