Debt Snowball vs. Debt Avalanche: How to Pick a Payoff Plan
The short answer
Both methods start the same way: make the minimum payment on every debt, then put any extra money toward one debt at a time. [1] The snowball method targets your smallest balance first. The avalanche method, which the CFPB calls the highest interest rate method, targets your highest-rate debt first. [1] Avalanche can save you money in the long run. Snowball shows progress sooner. [1] The best one is the one you’ll keep doing.
How the debt snowball works
- Keep making the minimum payment on every debt. [1]
- List your debts from smallest to largest balance. [2]
- Put any extra money toward the smallest one. [1]
- When it’s paid off, move that whole payment (the minimum plus the extra) to the next smallest debt. [2]
Each payoff frees up more money for the next one, so the payment grows like a rolling snowball. [1]
Pro: You may see progress quickly, especially if you have many small debts. For some people, that builds momentum and motivation. [2]
Con: You may pay more overall, because you’re not tackling the most costly debt first. [2]
How the debt avalanche works
- Keep making the minimum payment on every debt.
- List your debts from highest interest rate to lowest. [2]
- Put any extra money toward the highest-rate debt.
- When it’s paid off, move that whole payment to the next highest-rate debt. [2]
Pro: You get rid of your costliest debt first, which can save you money in the long run. [1]
Con: It may not feel like you’re making progress, especially if your highest-rate debt is also a big one. [1]
Side by side
| Snowball | Avalanche | |
|---|---|---|
| Pay extra toward | Smallest balance | Highest interest rate |
| Best if you’re motivated by | Seeing progress quickly | Saving the most money |
| Trade-off | May cost more overall | Progress can feel slow |
How to choose
The CFPB puts it simply: if you’re motivated by saving the most money, the highest interest rate method might be right for you. If you’re motivated by seeing progress quickly, consider the snowball method. [1]
A few questions to ask yourself:
- Have you started a payoff plan before and given up? Quick wins may help you stay with it.
- Is one debt’s interest rate much higher than the rest? That’s where avalanche shines.
- Do you have a few small balances you could clear soon? Snowball can knock them out.
Before you start
- Gather your bills. You’ll need each balance, minimum payment, interest rate and due date. [1][2]
- Map your due dates. Knowing what you owe and when helps you manage your debt. [1]
- Find your extra money. Both methods need something beyond the minimums. A budget shows you where it can come from. [3] Our guide on how to make a budget and stick to it walks you through it.
- Track your progress. Write down each payoff date. The Budget Tracker printable has room for your monthly numbers.
Related guides
Make it easier
Want it on paper? Use the Budget Tracker to keep track as you go.
Not financial advice.
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