How the avalanche method works
The avalanche method focuses on interest rates. You make the minimum payment on all your debts, then put every extra dollar toward the debt with the highest interest rate. Once that debt is paid off, you roll that payment into the next-highest interest rate debt, and so on.
Because you are attacking the debt that costs you the most in interest every month, you minimize the total interest you pay over the life of your debts. This is the mathematically optimal strategy.
Avalanche example
Say you have three debts:
- Credit card: $5,000 at 22% APR, $150 minimum payment
- Personal loan: $8,000 at 10% APR, $200 minimum payment
- Car loan: $12,000 at 6% APR, $300 minimum payment
Total minimum payments: $650/month. You have an extra $200/month to put toward debt, for a total of $850/month.
With avalanche, you put the extra $200 toward the credit card (22% APR) first. The credit card gets paid off in about 8 months. Then you roll that $350 ($150 minimum + $200 extra) into the personal loan, and so on. Total interest paid: about $3,200. Time to debt-free: about 28 months.
How the snowball method works
The snowball method focuses on balances. You make the minimum payment on all your debts, then put every extra dollar toward the debt with the smallest balance. Once that debt is paid off, you roll that payment into the next-smallest balance debt, and so on.
The idea is that paying off a small debt quickly gives you a psychological win—you see progress, which motivates you to keep going. This is the method popularized by Dave Ramsey.
Snowball example
Using the same three debts and the same $850/month total payment:
With snowball, you put the extra $200 toward the credit card ($5,000 balance—smallest) first. It gets paid off in about 8 months (same as avalanche in this case because the smallest balance also has the highest rate). Then you roll that $350 into the personal loan ($8,000), then the car loan ($12,000). Total interest paid: about $3,800. Time to debt-free: about 29 months.
The real difference: avalanche vs snowball
| Metric | Avalanche | Snowball | Difference |
|---|---|---|---|
| Total interest paid | $3,200 | $3,800 | Avalanche saves $600 |
| Time to debt-free | 28 months | 29 months | Avalanche is 1 month faster |
| First debt paid off | 8 months | 8 months | Same in this example |
| Psychological wins | Slower | Faster | Snowball wins |
In this example, avalanche saves $600 and gets you debt-free 1 month earlier. That is not a huge difference. In cases where the highest-interest debt also has the largest balance, the difference can be larger—but it is still usually less than $1,000–$2,000 for most people.
What the research says
A 2016 study by Harvard Business Review found that people who use the snowball method are more likely to successfully pay off their debts, even though it costs more in interest. The reason? Quick wins build momentum and motivation. People who see their first debt paid off quickly are more likely to stick with the plan long-term.
Another study from Northwestern University found that the number of debts paid off (not the amount of debt paid off) is the strongest predictor of whether someone will complete their debt repayment journey. This supports the snowball method's focus on paying off individual debts quickly.
How to choose
- Choose avalanche if: you are disciplined, you can stick to a plan without needing immediate reinforcement, and the interest rate difference between your debts is large (e.g., a 25% credit card vs a 4% car loan).
- Choose snowball if: you have tried and failed at debt repayment before, you need quick wins to stay motivated, or you have several small debts that can be paid off quickly to build momentum.
- Consider a hybrid approach: If you have one very small debt (under $1,000), pay it off first for the psychological win, then switch to avalanche for the rest. This gives you the best of both worlds.
Tips for success, regardless of method
- Stop adding debt. Cut up credit cards, freeze them in a bowl of water, or leave them at home. You cannot get out of a hole if you keep digging.
- Build a $1,000 starter emergency fund first. This prevents unexpected expenses from going on credit cards and derailing your plan.
- Automate your payments. Set up automatic payments for at least the minimums on all debts, plus the extra payment on your target debt. Automation removes willpower from the equation.
- Track your progress. Use a spreadsheet, an app, or our Debt Payoff Calculator to see how much you have paid off and how much longer until you are debt-free. Visual progress is motivating.
- Celebrate milestones. When you pay off a debt, celebrate (in a low-cost way). This reinforces the behavior and keeps you motivated.
- Once debt-free, redirect the money. When you make your last debt payment, do not increase your lifestyle. Redirect that $850/month to emergency fund, retirement, investing, and savings goals. This is how you build wealth after debt.