Should you use the debt snowball or the debt avalanche?

The avalanche pays off your highest-rate debt first and usually costs the least interest, while the snowball pays off your smallest balance first and gives you quick wins. Both work if you stick with them, so pick the one you are most likely to keep doing.

Same budget, different order

Both methods pay the minimum on every debt and send all extra money to one target debt. The only difference is which debt is the target.

Avalanche costs less

For the same monthly budget, paying the highest APR first usually costs less in total interest than paying the smallest balance first, and rarely costs more. How much less depends on your debts.

Snowball wins sooner

Paying the smallest balance first clears a whole debt quickly. Fewer bills and an early win can make it easier to keep going.

Roll every freed payment forward

When a debt is gone, its old minimum payment joins the extra and goes to the next target. Keeping your total monthly payment the same is what makes either method fast.

How both methods work

Start with a list of every debt you want to clear, with its balance, APR and minimum payment. Add up the minimums, then decide on an extra amount you can pay each month on top. That total is your monthly debt budget, and you keep it the same until every debt is gone.

Each month, pay the minimum on every debt. Send everything left over to one target debt. When the target is paid off, its minimum is freed up, and that money plus the extra goes to the next target. The payment rolls from debt to debt and grows each time.

The avalanche

With the avalanche, you order your debts from the highest APR to the lowest. The extra goes to the most expensive debt first, so every extra dollar stops the largest amount of interest.

On paper, the avalanche is usually the cheapest way to pay off a set of debts with a fixed monthly budget. The trade-off is that your highest-rate debt might also have a large balance, so it can take many months before any single debt disappears.

The snowball

With the snowball, you order your debts from the smallest balance to the largest, and ignore the rate. The extra goes to the smallest debt first, so you can often close an account within a few months.

The snowball usually costs more interest than the avalanche. How much more depends on the gap between your rates and your balances. Sometimes it is a few dollars, sometimes it is hundreds or more. What you get for that cost is a fast, visible result and one less bill to track.

How to choose

Run your own numbers in the planner below. If both orders come out close in total interest, the choice is about what keeps you going. If the avalanche saves a lot, it may be worth waiting a bit longer for the first win.

Some people use a mix. They clear one tiny balance first for a quick win, then switch to the avalanche for the rest. That is fine. Any order where you pay every minimum on time and send real extra money to one debt beats spreading small extra amounts across all of them.

Be honest about your habits. If you have started payoff plans before and stopped after a few months, the early wins of the snowball may be worth the extra cost. If you are motivated by seeing the total interest shrink, the avalanche will feel better.

Before you start either one

Keep a small emergency fund first, even $500 to $1,000. Without it, the next car repair goes on a card and undoes your progress.

Stop adding new charges to the debts you are paying down. Then set the minimum on every debt to autopay so a missed payment never costs you a late fee or a mark on your credit report. Pay the extra by hand, or with a second autopay, to the target debt.