Debt Management: Comparing the Snowball Method and the Avalanche Method

If you’re juggling multiple debts—such as credit cards, lines of credit, and student loans—you’ve likely wondered: What’s the smartest way to pay these off? Two popular strategies are the Snowball Method and the Avalanche Method. Both methods can be effective, but they follow different paths. The key is to choose one that you will commit to.

Quick Overview: What's the Difference?

Method	What You Pay Off First	Key Benefit	Best For
Snowball	Smallest balance first	Quick wins and motivation	People who need momentum to stay motivated
Avalanche	Highest interest rate first	Saves the most money over time	People who want to minimize interest costs

1. The Snowball Method: Start Small, Build Momentum

Using the Snowball Method is straightforward:

1. List all your debts from the smallest to largest balance.

2. Make minimum payments on all debts except the smallest.

3. Focus any extra cash on the smallest debt.

4. Once that debt is cleared, move on to the next smallest, following the same approach.

   
   

Example:

• $800 credit card (19.99%)

• $2,000 line of credit (10%)

• $5,000 student loan (4.5%)

  
  

You would pay off the $800 card first, regardless of its high-interest rate.

Why it works: It creates quick wins. Paying off a small debt offers a psychological boost. These wins help sustain your motivation, making it easier to stay committed to your plan.

Drawback: You might end up paying more in interest overall if you overlook higher-rate debts.

2. The Avalanche Method: Pay the Most Expensive Debt First

With the Avalanche Method, you follow a different path:

1. List your debts by interest rate, starting with the highest.

2. Make minimum payments on all but the highest-interest debt.

3. Direct any extra payments toward the debt with the highest interest.

   
   

Using the same example:

• $800 credit card (19.99%)

• $2,000 line of credit (10%)

• $5,000 student loan (4.5%)

  
  

Here, you'd still start with the $800 card if it has the highest rate. If larger debts come with higher interest rates, those become your priority.

Why it works: This method lets you pay less in interest over the long term. It often leads to being debt-free sooner.

Drawback: The process can feel slow, especially if your highest-interest debt happens to also have a large balance.

So, Which One Is Better?

If your goal is to minimize costs, the Avalanche Method is the best choice.

However, if you require motivation from quick wins to maintain your momentum, the Snowball Method may suit you better.

Both methods are preferable to inaction. Pick the strategy that you will actually implement.

A Hybrid Approach (Yes, It’s a Thing)

You are free to mix methods. Some people utilize the Snowball Method to eliminate one or two small debts for motivation. After that, they switch to the Avalanche Method for a stronger finish.

This hybrid approach gives you both momentum and savings.

Final Tips for Success

• Automate your payments to ensure nothing is missed.

• Apply any extra income—like raises, bonuses, or side hustle earnings—towards your target debt.

• Use a debt repayment calculator to visualize your repayment timeline.

• If you're feeling overwhelmed, consider consolidating your high-interest debts into a lower-interest line of credit or balance transfer card.

  
  

Bottom Line

There’s no one-size-fits-all solution for debt repayment. However, taking action is always better than waiting for the “perfect” strategy. The Snowball Method keeps you emotionally invested, while the Avalanche Method typically saves you more money. Ultimately, paying down your debt is what matters most, and both methods help achieve that goal.