How to Pay Off Debt: Snowball vs Avalanche
Two proven methods can help you pay off debt faster: the debt snowball, which builds motivation with quick wins, and the debt avalanche, which saves the most interest. Here's how each works, how to choose, and other tools that can speed things up.
By Pond.com editors Updated 4 min read
Quick answer
- List all your debts with their balances, interest rates and minimum payments.
- Pay the minimum on everything, then put every extra dollar toward one target debt.
- The snowball method targets the smallest balance first for quick wins; the avalanche method targets the highest interest rate first to save the most money.
- When a debt is paid off, roll its payment into the next one, so your payments grow.
- Keep a small emergency fund so a surprise bill doesn't send you back to the credit cards.
Paying off debt can feel overwhelming when you're juggling several balances. Having a clear plan makes a big difference. The two most popular strategies, the debt snowball and the debt avalanche, both work the same basic way: pay the minimum on everything, then throw every spare dollar at one debt at a time.
This guide is general information, not financial advice.
Step 1: List your debts
Write down every debt, including credit cards, personal loans, car loans, medical bills and student loans.
| Debt | Balance | Interest rate | Minimum payment |
|---|---|---|---|
| Store card | $600 | 29% | $30 |
| Credit card A | $3,500 | 24% | $105 |
| Personal loan | $6,000 | 12% | $200 |
| Car loan | $12,000 | 7% | $350 |
Step 2: Find extra money
Look at your budget for money you can put toward debt each month, such as cutting subscriptions, eating out less or earning extra income. Even $100 to $200 a month makes a real difference. Our guides to making a budget and lowering your monthly bills can help you find it.
The debt snowball method
Order: smallest balance to largest, ignoring interest rates.
- Pay the minimum on every debt.
- Put all extra money toward the smallest balance.
- When it's paid off, add its payment to the next smallest debt.
- Repeat. Your payment grows like a snowball.
Why it works: you pay off your first debt quickly, which gives you a sense of progress and motivation to keep going.
The debt avalanche method
Order: highest interest rate to lowest, ignoring balances.
- Pay the minimum on every debt.
- Put all extra money toward the debt with the highest interest rate.
- When it's paid off, add its payment to the debt with the next highest rate.
- Repeat.
Why it works: you cut down the most expensive debt first, so you pay the least interest overall and usually finish a little sooner.
Which should you choose?
| Snowball | Avalanche | |
|---|---|---|
| First target | Smallest balance | Highest interest rate |
| Interest paid | More | Least |
| Motivation | Quick early wins | Slower early wins |
| Best for | People who need momentum to stay on track | People motivated by saving the most money |
In the example above, both methods start with the store card, which has the smallest balance and the highest rate. They only differ when the smallest debt isn't the most expensive one. If the difference in interest is small, choose the method you're most likely to stick with.
Paying off more than one debt? Compare the snowball and avalanche methods and see your debt-free date. Open calculatorTools that can speed things up
- 0% balance transfer card: move high-interest card debt to a card with a 0% intro rate, often for 12 to 21 months. There's usually a 3% to 5% transfer fee, and you need a plan to repay the balance before the intro period ends.
- Debt consolidation loan: combine several debts into one personal loan at a lower rate.
- Call your card issuers: ask for a lower interest rate, especially if you've paid on time.
- Debt management plan: a nonprofit credit counseling agency can negotiate lower interest rates with your card issuers and combine payments into one monthly payment.
Protect your progress
- Keep a small emergency fund, at least $500 to $1,000, so surprise costs don't go on a credit card.
- Stop adding new debt while you pay off the old.
- Get your employer's 401(k) match if you have one. It's an instant return that's hard to beat.
- Celebrate milestones in small, inexpensive ways.
Common questions
The avalanche method saves the most money and usually gets you out of debt slightly faster, because you tackle the most expensive debt first. The snowball method gives faster early wins, which helps many people stay motivated. The best method is the one you'll stick with.
Most experts suggest building a small emergency fund, such as $500 to $1,000, first, and getting any employer 401(k) match, then putting extra money toward high-interest debt. Without a cushion, one surprise bill can undo your progress.
Paying down credit card balances usually helps, because it lowers your credit utilization. Paying off an installment loan may have little effect or even a small temporary dip, but on-time payments and lower debt are good for your finances either way.
It can be, if you get a lower interest rate and stop adding new debt. A 0% balance transfer card or a lower-rate personal loan can cut your interest costs. If you keep using the paid-off cards, consolidation makes things worse.
Nonprofit credit counseling agencies, such as those affiliated with the National Foundation for Credit Counseling (NFCC), offer free or low-cost budgeting help and can set up a debt management plan with lower interest rates on credit cards.