Debt Avalanche vs Snowball: Which Is Better and When?

Quick definitions

• Debt avalanche: Pay extra toward the highest‑interest debt first while making minimums on the rest; once cleared, roll the freed amount to the next highest APR, and repeat.
• Debt snowball: Pay extra toward the smallest balance first while paying minimums on others; knock out quick wins, then snowball payments into the next balance up the list.

Which is better?

• Lowest cost and usually fastest: Avalanche saves the most on interest and can shorten payoff time, especially with large high‑APR credit cards or personal loans.
• Easiest to stick with: Snowball’s early victories boost motivation and adherence, which can matter more than theoretical savings if consistency has been a challenge.
• Evidence across guides and lenders: Both methods work if consistently applied; choosing one and focusing extra cash on a single target beats spreading small extras across all debts.

When to choose each

• Choose avalanche if:
  • High‑APR balances dominate (credit cards at 25–40% APR, costly personal loans).
  • Confidence and discipline are strong, and short‑term wins aren’t needed to stay engaged.
• Choose snowball if:
  • Multiple small balances cause overwhelm and missed payments; quick closures will build momentum.
  • APRs are similar across debts, reducing the interest‑savings gap vs avalanche.

A practical hybrid

Start with a 60–90 day snowball to clear two or three smallest balances, then switch to avalanche to maximize savings—this can combine motivation with math without materially delaying payoff when APRs are spread out. Keep minimums on all debts, automate payments, and channel every windfall (tax refunds, bonuses) to the current target for compounding progress.

Key tips that boost results

• Cut utilization: Aim overall revolving utilization under 10%10% to reduce interest drag and support credit scores during repayment.
• Avoid new hard pulls: New credit inquiries can increase borrowing costs and undermine progress; pause fresh borrowing.
• Refinance selectively: A well‑priced balance transfer or consolidation loan can drop APRs and accelerate an avalanche plan; mind fees and promo windows.
• Track with one snapshot: Maintain a single list of balances, APRs, and minimums; update monthly to visualize progress and keep commitment high.

FAQs

• Which method saves more money? Avalanche almost always saves more in total interest because it targets the most expensive debt first.
• Which method works better psychologically? Snowball tends to be easier to maintain because quick wins reinforce behavior and reduce overwhelm.
• Can methods be mixed? Yes—clear a couple of tiny balances with snowball, then switch to avalanche for the biggest savings.
• What if APRs are similar? If interest rates cluster tightly, choose the approach that keeps motivation highest—interest savings difference is smaller, so consistency wins.