Debt Snowball vs Avalanche: Which One Should You Pick?

If you've spent any time reading about paying off debt, you've probably seen people argue about this one. Snowball people say motivation is everything. Avalanche people say math is math. Both sides are right, which is annoying if you just want someone to tell you what to do.

So I ran a couple of real-looking scenarios through our debt payoff calculator to see how big the difference actually is. It depends a lot on your particular debts.

Quick refresher

Both methods start the same way. You pay the minimum on every debt, then throw every extra dollar at one "target" debt. When that one's gone, its payment rolls over onto the next target. The only difference is which debt you target first:

• Snowball: smallest balance first.
• Avalanche: highest interest rate first.

(If the snowball idea is completely new to you, start here.)

Scenario 1: it barely matters

Let's say you've got a store card, two credit cards and a car loan. You can pay $740 a month in total, which is $250 more than the minimums.

Here's what happened when I ran it both ways:

Ninety-eight dollars. Over more than two years. Meanwhile the snowball knocks out your second debt five months earlier, which feels a lot better when you're in the middle of it.

What surprised me more was the "do nothing" option. Paying only the minimums on those same debts takes 50 months and costs $7,133 in interest. So actually picking a method (any method) saves you almost $4,000. Arguing about which one saves you about $100.

Scenario 2: okay, now it matters

Different situation. A small medical bill at 0%, a car loan at 6%, and one big credit card at 24%. You have $300 extra each month.

That's $1,062 and two extra months, and it makes sense once you think about it. With the snowball you spend the first year paying off a bill that isn't charging you anything and a cheap car loan. The whole time, a 24% credit card is quietly getting bigger. In this case the avalanche is clearly better.

How I'd decide

Look at your list and ask one question: is my biggest debt also my most expensive one?

If yes, and the rate gap is large (think 20%+ on the card vs single digits on everything else), go avalanche. The savings are real.

If your rates are fairly close together, or your smallest debts happen to have high rates anyway, the snowball will cost you very little extra. In that case I'd pick whichever one you're more likely to actually stick with. For a lot of people that's the snowball. Closing an account completely a few months in is a pretty good feeling, and it gives you one less bill to think about.

And you don't have to be strict about it. Plenty of people clear one or two tiny balances first to get going, then switch to avalanche order for the rest. That works fine too.

A few questions people ask

Want to see the snowball play out month by month? I wrote up a full example here.