Snowball or avalanche: how to choose

Resources · Paying off debt · 4 min read Building

Key points

• The snowball pays the smallest balance first. The avalanche pays the highest interest rate first.
• The avalanche costs less interest on paper, but the gap can be tiny or big.
• The snowball usually gets you a paid-off debt sooner.
• Running both orders on your own numbers is the clearest way to see the trade-off.

Snowball vs avalanche in one paragraph

Under the hood, both methods are the same. You pay the minimum on every debt, throw any extra at one target debt, and when it’s cleared, its payment rolls into the next one. The only thing that changes is the order. The snowball sorts by balance, smallest first. The avalanche sorts by interest rate, highest first.

Example 1: a small gap

The same maths works in any currency. Both examples use the same assumptions. Interest is charged monthly at the yearly rate divided by 12, on the balance before that month’s payment. Minimum payments stay fixed. Nothing new goes on the debts. The last payment on each debt is whatever clears it.

The debts:

• Card A: $2,000 at 18%, minimum $60
• Card B: $6,000 at 24%, minimum $150
• Personal loan: $9,000 at 11%, minimum $220

Total paid each month: $650.

The avalanche saves $184.74 and one month. The snowball clears a debt a full year earlier. Not much in it either way.

Example 2: a bigger gap

The debts:

• Card X: $1,000 at 9%, minimum $30
• Loan Y: $3,000 at 12%, minimum $90
• Card Z: $12,000 at 26%, minimum $300

Total paid each month: $700.

This time the avalanche saves $974.55 and two months. Why the bigger gap? The largest debt also carries by far the highest rate. Under the snowball, that expensive balance waits its turn, charging interest the whole time.

But look at the other side. The snowball clears its first debt in month 4. Under the avalanche, nothing is fully paid off for more than two years. That’s a long stretch with nothing to show for it.

Questions to help you decide

No answer suits everyone here. These questions are about working out which trade-off you can live with.

How far apart are your rates?
If they’re within a few points of each other, the two orders often finish close together. If one debt has a much higher rate, and especially if it’s a big one, the avalanche can save noticeably more.

How long until your first payoff?
Check when each method clears its first debt. If the avalanche means waiting years, be honest with yourself. Would you actually stick with it?

What’s worked for you before?
If you’ve started payoff plans and drifted off them, quick wins might count for more than a lower total. If you’re steady once you’ve committed, the lower cost might count for more.

How many bills are you juggling?
Clearing small debts early cuts down the payments you have to track. For some people, that alone lowers stress and the risk of missing one.

Middle-ground options

You don’t have to follow either method to the letter.

Some people start with one quick win, clearing a very small debt for momentum, and then switch to highest rate first. Others break ties sensibly: when two balances are similar, they go after the higher-rate one. And it pays to recheck when things change. A promotional rate ending, a rate rise or a new debt can all shift which order costs less.

Whatever you pick, the part that matters most is identical. Keep paying every minimum. Keep your total payment steady. Roll each freed-up payment into the next debt.

Common questions

Which is better, snowball or avalanche?

Neither one suits everyone. The avalanche usually costs less interest. The snowball usually gets you a paid-off debt sooner. It comes down to your rates and what keeps you going.

How much more does the snowball method cost?

That depends on your numbers. In the examples above, the gap was $184.74 in one case and $974.55 in the other.

Can you switch between snowball and avalanche?

Yes. Some people clear one very small debt first for momentum, then move to highest rate first. Plenty also recheck their order when rates change.

Try it

Enter your own debts and compare the month each order gets you clear: find your Freedom Date. Here’s the thing, though. Small changes to your monthly extra can move the date more than the choice of order does.

General information only, not financial advice. Your situation is your own.