Debt Payoff Strategies: Avalanche vs Snowball

Two dominant strategies exist for paying off debt: the avalanche method (highest interest first) and the snowball method (smallest balance first). Here is how each works and which might suit you.

The Avalanche Method

List debts by interest rate from highest to lowest. Pay minimums on everything. Put all extra money toward the highest-interest debt. When that is paid off, roll payments to the next highest.

Mathematical advantage: Minimizes total interest paid. You attack the most expensive debt first.

Psychological challenge: If your highest-interest debt is also large, progress can feel slow.

The Snowball Method

List debts by balance from smallest to largest. Pay minimums on everything. Put all extra money toward the smallest balance. When that is paid off, roll payments to the next smallest.

Psychological advantage: Quick wins build momentum. Eliminating debts feels good and motivates continued effort.

Mathematical cost: You may pay more total interest by leaving high-rate debt for later.

Which to Choose

Choose avalanche if: You are motivated by math and optimization. You can stay committed without quick wins. The interest rate difference between debts is significant.

Choose snowball if: You need psychological wins to stay motivated. You have struggled with debt payoff before. The interest rate difference between debts is small.

The Hybrid Approach

Some people start with snowball for momentum, then switch to avalanche once they have proven they can stick with it.

Others use avalanche generally but knock out a small debt first if it provides meaningful motivation.

Beyond the Method

The best debt payoff strategy is the one you actually follow. A mathematically optimal plan that you abandon is worse than a suboptimal plan you complete.

Both methods share core principles: pay more than minimums, focus extra payments on one debt at a time, roll freed-up payments forward.