Debt Snowball vs. Avalanche: Which Pays Off Debt Faster?
If you owe money on more than one credit card or loan, you've probably come across the two most popular ways to pay it down: the debt snowball and the debt avalanche. Both work, and both ask the same thing of you: a fixed monthly amount that's more than your minimum payments. The difference is the order you pay your debts off in, and that order changes how much interest you pay and how soon you see progress.
Below we compare the two methods on the same $10,000 of credit card debt, so you can see the trade-off in dollars and months.
The two methods in one minute
Debt snowball: pay the minimum on every debt and put every extra dollar toward the smallest balance. When it's paid off, roll its payment into the next-smallest balance.
Debt avalanche: the same, except the extra money goes to the debt with the highest interest rate (APR) first.
With either method, the payment you free up when a debt is gone isn't spent elsewhere. It moves to the next debt on the list. That roll-over is what makes both plans speed up over time.
Our example: $10,000 across three cards
Say you have three credit cards and can put $500 a month toward them:
Store card: $1,100 balance, 19.99% APR, $35 minimum payment
Rewards card: $2,900 balance, 27.99% APR, $85 minimum payment
Travel card: $6,000 balance, 22.99% APR, $150 minimum payment
The minimums add up to $270, which leaves $230 a month of extra payment. To keep the comparison simple, the minimums stay the same every month and nothing new goes on the cards.
With the debt snowball
The extra $230 goes to the store card first, because it has the smallest balance.
Store card paid off in month 5
Rewards card paid off in month 14
Travel card paid off in month 26
Total interest: about $2,886
With the debt avalanche
The extra $230 goes to the rewards card first, because it has the highest rate at 27.99%.
Rewards card paid off in month 11
Travel card paid off in month 25
Store card paid off in month 26
Total interest: about $2,768
Paying only the minimums
For comparison: paying just the $270 in minimums each month, the last card wouldn't be paid off until month 69, almost six years from now, and the interest would come to about $8,576. Either plan saves more than $5,600 and gets you out of debt more than three and a half years sooner.
What the numbers tell us
The avalanche saved about $118 in this example, and both plans finished in month 26.
The snowball cleared the first card six months sooner (month 5 instead of month 11).
The biggest win is having a plan at all. Going from minimum payments to a steady $500 a month cut the interest by about two thirds.
The gap between the two methods grows when your rates are far apart, for example a 29% credit card alongside a 9% personal loan, and when the balances are large. When your rates are close together, the gap is small.
Which method should you choose?
Choose the avalanche if...
you want to pay the least interest possible
one of your debts has a much higher rate than the others
your highest-rate debt isn't so large that it will take years before it's gone
Choose the snowball if...
you've tried to pay off debt before and lost momentum
you have a few small balances you could clear within months
having fewer bills to keep track of would make your month easier
Many people find that closing an account early keeps them going. If that's you, the few dollars of extra interest the snowball costs can be worth it, because the best plan is the one you stick with.
A hybrid many people use
Start with the snowball to clear one or two very small balances quickly, then switch to the avalanche for everything else. You give up very little interest and still get an early win.
Five tips that make either plan work
Stop adding to the balances. New purchases on the cards you're paying down slow every plan. Use a debit card or cash while you pay off debt.
Make your budget automatic. Set up automatic payments for at least the minimums, so a busy month never turns into a late fee.
Ask for a lower rate. A call to your card issuer costs nothing. If you have a history of on-time payments, some issuers will lower your APR.
Read the fine print on balance transfers. A 0% balance transfer card can pause interest, but there's usually a transfer fee of 3% to 5%, and the rate rises when the promotional period ends.
Send windfalls to your target debt. A tax refund, a year-end bonus or a cash gift can take months off your plan.
Run your own numbers
Every situation is different. Our free debt payoff calculator lets you enter each of your debts and a monthly budget. It shows your debt-free date and total interest for both methods side by side, and the order your debts get paid off in.
Frequently asked questions
Is the debt avalanche always cheaper?
When you pay the same amount each month, the avalanche costs the same or less interest than the snowball, because it always shrinks the most expensive balance first. If your smallest debt also has the highest rate, the two methods are identical.
Do I still pay the minimums on my other debts?
Yes. A missed minimum payment can bring late fees, a higher penalty APR and damage to your credit score. Both methods pay every minimum first and only then send the extra money to one debt.
Can I use these methods for loans as well as credit cards?
Yes. Personal loans, auto loans and student loans can all be part of the plan. Before you put extra money toward a loan, check whether it charges a prepayment penalty.
How much extra do I need to pay each month?
Any amount above your minimums helps, and the more you add, the faster it goes. In our example, raising the budget from $500 to $600 a month gets you out of debt in 21 months instead of 26 and saves about $600 more in interest.
The examples are for illustration only, with rounded figures, and are not financial advice. Your card agreements decide your actual minimum payments and interest.
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