Both methods work the same way: pay the minimum on every debt, and put all your extra money on one debt until it is gone. Then move to the next. They differ in which debt goes first.
The two methods
- Avalanche: pay the debt with the highest interest rate first. It usually costs the least.
- Snowball: pay the debt with the smallest balance first. You clear debts sooner, which can keep you motivated.
A worked example
Two debts and $100 extra a month:
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| A | $2,000 | 25% | $60 |
| B | $500 | 5% | $25 |
| Method | Pays first | Interest paid | Debt-free in |
|---|---|---|---|
| Avalanche | A (25%) | about $363 | 16 months |
| Snowball | B (smallest) | about $438 | 16 months |
Avalanche saves about $76 here (the table rounds each total). With only minimum payments, the same debts would take 58 months and cost about $1,473. Try your own debts in the debt payoff calculator.
Which should you choose?
- If you want to save the most money, choose avalanche.
- If you need quick wins to stay on track, choose snowball.
- The best method is the one you will keep doing.
Tips
- Keep your total monthly payment the same. When a debt is gone, move its payment to the next one.
- Stop adding new debt. The plan only works if the balances go down.
- Check for a lower rate. A balance transfer or a lower-rate loan can cut interest, but watch for fees.
- Keep a small emergency fund so a surprise bill does not go back on a card.
If payments do not cover interest
If a minimum payment is smaller than a month's interest, the balance never falls. The calculator warns you. You need to pay more on that debt.
This is general information, not financial advice.
Debt payoff calculator Enter your debts and compare both methods.This article is for education and is not financial, tax or legal advice. Figures are checked against the sources above and may change. Read the full disclaimer.