MoneyLifeCalcIf you have several credit cards or loans, the order you pay them off matters. The two best-known strategies are the debt snowball and the debt avalanche. Both work. They just reward you differently.
How both methods start
Both methods use the same foundation. Pay the minimum on every debt, then put every extra dollar toward one target debt. When that debt is paid off, add its payment to the next target. Your total monthly payment stays the same, but more and more of it goes to paying down balances instead of interest. That rolling effect is what makes both methods powerful.
The snowball: smallest balance first
The snowball method targets the debt with the smallest balance, regardless of interest rate. You pay off a debt quickly, which feels good and builds momentum. For many people, that early win is what keeps them going.
The avalanche: highest interest rate first
The avalanche method targets the debt with the highest interest rate. Because the most expensive debt shrinks first, this method always costs the least total interest and usually finishes a little sooner. The trade-off is that the first payoff can take longer if your highest-rate debt also has a large balance.
How big is the difference?
It depends on your debts. When the interest rates are close, the two methods land within a few dollars of each other. When one card charges 25% and a car loan charges 6%, the avalanche can save hundreds or thousands. Our Debt payoff planner runs both methods on your actual debts and shows the debt-free date, total interest, and the month each debt is paid off, side by side.
The extra payment matters more than the order
Whichever method you choose, the amount you add on top of the minimums has a far bigger effect than the order. Even $100 to $200 extra a month can cut years off a payoff plan. Paying only the minimum on a credit card, on the other hand, can stretch a balance out for decades. See how long in the Credit card minimum payment calculator.
How to choose
- Choose avalanche if you're motivated by the math and want the lowest total cost.
- Choose snowball if you've struggled to stick with a plan before and want quick wins.
- Watch for warning signs. If a minimum payment doesn't even cover the monthly interest, that balance grows unless you pay more. The planner flags this.
Whichever you pick, stop adding new charges to the cards you're paying off, and track your progress. A net worth tracker is a satisfying way to watch debt fall and your net worth rise month by month.