Both methods pay every minimum and put all your spare money on one debt at a time. The difference is which debt goes first. Here are four debts paid off both ways, with the exact payoff months and interest, so you can see what the choice really costs.
If you have several debts, such as a credit card or two, a personal loan and a car loan, the two best-known ways of paying them off are the debt snowball and the debt avalanche. Both work the same way:
- Pay the minimum on every debt, every month.
- Put every extra dollar you can afford on one target debt.
- When the target is paid off, add its whole payment to the next target. Your payment grows each time a debt disappears, which is where the name “snowball” comes from.
The only difference is the order. The avalanche targets the highest interest rate first. The snowball targets the smallest balance first.
Follow along: open the Debt Snowball vs Avalanche Calculator. The example below is the one it opens with, so you can check every number, then replace it with your own debts.
The example: four debts, $20,200
| Debt | Balance | Rate (APR) | Minimum payment | Interest in month 1 |
|---|---|---|---|---|
| Credit card | $6,500 | 22.9% | $150 | $124.04 |
| Store card | $1,200 | 26.9% | $40 | $26.90 |
| Personal loan | $3,500 | 11.9% | $110 | $34.71 |
| Car loan | $9,000 | 6.5% | $220 | $48.75 |
| Total | $20,200 | $520 | $234.40 |
The minimums add up to $520 a month, and on top of that there is $250 a month extra, so $770 a month goes to debt in total. Notice the credit card: of its $150 minimum, $124 is interest, so only $26 a month reduces the balance.
First: what happens with minimums only
If you paid only each minimum and never moved a freed-up payment to another debt, the credit card alone would take 93 months, almost 8 years, and cost about $7,400 in interest. Across all four debts the interest would come to roughly $10,200. Both plans below beat this by a wide margin. Choosing a plan and sticking to it matters more than which plan you choose.
The avalanche: highest rate first
The extra $250 goes to the highest-rate debt, then down the list by rate:
- Store card (26.9%) paid off in month 5.
- Credit card (22.9%) paid off in month 22.
- Personal loan (11.9%) paid off in month 25.
- Car loan (6.5%) paid off in month 31.
Debt-free in 31 months, with $3,389 of interest in total.
The snowball: smallest balance first
The extra $250 goes to the smallest balance, then the next smallest:
- Store card ($1,200) paid off in month 5.
- Personal loan ($3,500) paid off in month 13.
- Credit card ($6,500) paid off in month 26.
- Car loan ($9,000) paid off in month 32.
Debt-free in 32 months, with $3,746 of interest in total.
Side by side
| Avalanche | Snowball | |
|---|---|---|
| Months to debt-free | 31 | 32 |
| Total interest | $3,389 | $3,746 |
| First debt cleared | Month 5 | Month 5 |
| Second debt cleared | Month 22 | Month 13 |
| Debts gone after a year | 1 | 1 (the second goes a month later) |
The avalanche saves $357 and finishes a month earlier. The snowball clears its second debt 9 months sooner, so you have one fewer bill to deal with from month 13 instead of month 22.
Here both methods start with the store card, because it happens to be both the smallest balance and the highest rate. When the smallest debt is also the most expensive, the two methods agree at first, and the gap between them stays small.
When the gap gets bigger
The snowball costs most when a large debt carries a much higher rate than the small ones, because the snowball leaves that expensive debt until later. Try, for example, a $12,000 credit card at 24.9%, an $800 medical bill at 0% and a $15,000 student loan at 5.5%, with $250 extra a month. The snowball pays off the interest-free medical bill first, in month 3; the avalanche leaves it until month 16. Both finish in 45 months, but the snowball costs $185 more in interest, simply for clearing a debt that charged nothing.
The bigger your balances and the wider the spread of rates, the more the avalanche saves. If your small debts are also your expensive ones, the methods give nearly the same result.
How to choose
- Choose the avalanche if you are motivated by the numbers and confident you will stick with a plan where the first big win may take a year or more.
- Choose the snowball if you have tried to pay down debt before and lost momentum. Seeing a debt disappear in the first few months is a real reason people keep going, and a plan you abandon costs far more than $357.
- Use a hybrid if you like: clear one or two tiny balances first for the quick win, then switch to highest rate first.
Run your own debts through the calculator. If it shows a gap of a few hundred dollars, choose the method you prefer. If it shows thousands, the avalanche is worth the patience.
Ways to get out of debt faster with either method
- Increase the extra payment, even slightly. In the example, raising the extra from $250 to $300 a month brings the avalanche down from 31 to 29 months.
- Put windfalls on the target debt, such as tax refunds, bonuses or money from selling things.
- Stop adding new debt. Neither method works if the cards are still being used.
- Keep a small emergency fund so an unexpected bill does not go straight back onto a card.
- Ask for a lower rate. A lower APR on your most expensive card helps either plan. A 0% balance transfer can help too, if you can clear it before the offer ends and the transfer fee is worth it.
For a single loan, the Loan Calculator shows the payment, total interest and full schedule. To see how extra payments shorten a mortgage, use the Mortgage Payoff Calculator.
Frequently asked questions
Which is better, debt snowball or debt avalanche?
The avalanche (highest interest rate first) always costs the least interest. The snowball (smallest balance first) clears individual debts sooner, which helps many people stay motivated. If the difference for your debts is small, choose the method you are more likely to stick with.
How much does the snowball method cost compared with the avalanche?
It depends on your debts. In this guide’s example of $20,200 across four debts, the snowball costs $357 more in interest and takes one month longer. The gap grows when a large debt has a much higher rate than the small ones.
Should I include my mortgage?
Usually not. Mortgages are large, long and low-rate, so most people pay off other debts first and treat the mortgage separately.
Do I stop paying minimums on the other debts?
No. Both methods pay the minimum on every debt every month. Only the extra money goes to the target debt. Missing minimums brings fees, penalty interest and damage to your credit record.