Loans and debt guide
Debt Snowball vs. Debt Avalanche
These two repayment strategies direct extra money to different balances while minimum payments are made on the rest.
How the snowball works
Pay the required minimum on every account, then put the extra amount toward the smallest balance. When that debt is cleared, roll its payment into the next target. Seeing an account disappear can make progress tangible, although this order does not necessarily minimize modeled interest.
How the avalanche works
Continue minimums on every debt and direct extra money to the highest APR. Once it is paid, move the extra payment to the next-highest rate. When payment amounts, balances, and rates are otherwise the same, this order generally reduces interest in a standard payoff model because it attacks the most expensive balance first.
Compare the tradeoff with real numbers
Suppose one balance is $500 at 8% APR and another is $1,500 at 22% APR. Snowball targets the $500 balance first; avalanche targets the $1,500 balance at 22%. The example describes order only; exact interest and payoff dates require each minimum, payment date, fees, and total monthly amount.
Choose a plan you can keep using
List current APRs, balances, minimums, and due dates from statements. Keep every required payment current. Promotional rates, past-due accounts, fees, and changing balances can alter the best next step. If minimum payments are unaffordable, contact creditors and consider a reputable nonprofit counselor instead of relying on an optimistic calculator projection.
Worked example
With a $500 balance at 8% APR and a $1,500 balance at 22% APR, the snowball directs extra money to the $500 balance first. The avalanche directs it to the $1,500 balance at 22% first; both still make each required minimum payment.
Frequently asked questions
Which method pays less interest?
With the same balances, APRs, and total payment behavior, directing extra money to the highest APR first generally lowers modeled interest.
Should I stop minimum payments on other debts?
No. Continue required minimums while targeting extra payments.
Sources and further reading
Try the calculator
Use the Debt Payoff Calculator to explore your own numbers with the assumptions shown in the tool.
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Educational content only; not individualized financial, tax, or legal advice.