Debt Snowball vs. Debt Avalanche

What is the Debt Snowball Method?

The Debt Snowball method is a strategy that focuses on psychology and motivation. You list all of your debts from the smallest balance to the largest, regardless of their interest rates. You make the minimum payment on all your debts, but you throw every extra dollar you have at the smallest debt until it's gone.

Once that smallest debt is paid off, you take the money you were paying on it (its minimum payment plus your extra payment) and roll it over to the next-smallest debt. This creates a "snowball" effect—as you pay off debts, your monthly payment for the target debt gets larger and larger, helping you knock out the remaining debts faster and faster.

• Best for: People who need quick wins to stay motivated.
• Key Benefit: Strong psychological and emotional boost.

What is the Debt Avalanche Method?

The Debt Avalanche method is a strategy that focuses purely on mathematics. You list all of your debts from the highest interest rate (APR) to the lowest, regardless of their balance. You make the minimum payment on all your debts, but you throw every extra dollar you have at the debt with the highest interest rate.

Once that high-interest debt is paid off, you roll all the money you were paying on it over to the debt with the next-highest interest rate. While it might take longer to get your first "win," this method is guaranteed to save you the most money on interest over the life of your loans.

• Best for: People who are disciplined and want to save the maximum amount of money.
• Key Benefit: Pay the least amount of interest possible.

Side-by-Side Comparison