Avalanche vs. Snowball: Two Proven Ways to Pay Off Debt. Here's Which One Is Right for You.
Bottom line
Two proven payoff strategies exist. and the one that saves more money isn't always the one people actually finish.
In this guide
What it is
Two methods for paying off multiple debts. The avalanche targets the highest interest rate (the percentage a lender charges you to borrow) first. The snowball targets the smallest balance first, regardless of rate.
By the numbers
Say you have three debts. a $3,000 credit card at 24% interest, a $1,100 medical bill at 0%, and a $6,500 personal loan at 11%. The avalanche saves you $1,340 in interest compared to the snowball. But the snowball gets you your first full payoff in 6 months instead of 22.
How it works
With the avalanche, you pay minimums on everything and throw every extra dollar at the highest rate debt first. With the snowball, you do the same but aim at the smallest balance first. Once one debt is gone, that freed up payment rolls into the next target.
The catch
The avalanche is mathematically better, but most people quit before they see results. because it can take over a year to wipe out your first debt. The snowball's early wins are psychologically real, and finishing a debt keeps people on track. The best method is the one you actually stick with.
What to check next
List every debt you owe with its balance and interest rate, then pick the avalanche or snowball order and apply it starting next payment.
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