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Avalanche vs. snowball: Which is the best way to pay off debt?

See which method of tackling your debt can help you save time and money.

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Jonathan Brodsky

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Kyle Morgan
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Both the debt avalanche method and the debt snowball method can help you pay off several debts as quickly and efficiently as possible. Which strategy will work best for you depends on your financial situation and motivational style.

Which should I choose?

That depends on your financial situation and motivational style. If you have a number of smaller debts that are overwhelming to keep track of, the snowball method can help you clear those out and regain control of your finances.

If you have a lot of debt or are paying high interest rates on one or more debts, you might find it more motivating to save money in the long run by using the debt avalanche method.

And if neither one of those scenarios describes you perfectly, you can combine the two options — pay off your small debts first using the snowball method and then switch over to the avalanche method to pay your larger debts off in order of interest rates.

Avalanche method

When paying off debts using the debt avalanche method — also called the debt-stacking method — you pay off your debts with the highest interest rates first.

When you tackle the debt with the highest interest rate, you’ll see savings in the form of unpaid interest. You can put that savings towards the next debt with the highest interest rate, and so on until you’re debt-free.

How the debt avalanche method works

Say you owe:

  • $500 on a payday loan with a 300% interest rate
  • $200 on a credit card with a 25% interest rate
  • $10,000 in student loans at a 7% interest rate

Here, you’d start with your payday loan because you’re paying an extremely high interest rate. Once you’ve cleared that debt, you’d move to your credit card debt and then finally your student debts.

With the payday loan as your focus debt, you’d pay as much as you can on that debt each month and only make the minimum payments on your other debts. By focusing on the payday loan, you’re minimizing the amount you’d be paying towards interest, which leads to savings.

When the payday loan is paid off, you’d move on to your credit card debt. Because this is now your focus debt and you’ve paid off your payday loan, you could redirect your payday loan repayment amount, and anything extra you can, towards this debt until it’s satisfied.

On the other end of the spectrum, your student loan has the lowest interest rate and will take a long time to pay off, making it ideal to save for last.

Pros and cons of the avalanche method

  • Minimize money spent on interest
  • Debts will be paid faster than they would with the snowball method
  • Less motivating than the snowball method
  • Can take a long time to pay off first debt

Dive deeper into the debt avalanche method

Snowball method

With the snowball method, you pay off your smallest debts first. Once you pay the littlest debt, you use the money that you would have been paying on that debt and apply it to the next in line. This way each time you pay off a debt — moving up your list from smallest to largest — you’ll have a larger payment amount to go towards the next debt in line.

The key to this method is that once you get the ball rolling and start seeing your minimal debts disappear, you’ll be able to move on and tackle the larger ones easier.

How the debt snowball method works

Let’s say we have the same situation from before:

  • $500 on a payday loan with a 300% interest rate
  • $200 on a credit card with a 25% interest rate
  • $10,000 in student loans at a 7% interest rate

You’d pay off your credit card first, then your payday loan and then your student loan debt.

So you’d continue to make the minimal payments on your other debts, but if you can scrap together an extra $50 or $100 a month to pay towards the balance of your credit card, plus the minimum payment, that debt would be eliminated in anywhere from two to four months.

Next, you’d focus on your payday loan debt. So if you were originally making minimum payments of $125, you’d add on the money you were paying towards your credit card and use it to settle your payday loan debt quicker.

After that, you’d take all of the money that you we’re paying towards previous debts and hurl them in the direction of your student loans.

Pros and cons of the snowball method

  • Paying off the first debt can get you motivated
  • Eliminate the number of debts you have more quickly
  • May take longer than the avalanche method
  • Potential to pay more interest in the long run

Dive deeper into the debt snowball method

Compare debt relief options

If you have too much debt to pay off using the avalanche or snowball method, consider using a debt relief service. These companies can help negotiate with creditors to lower the amount you need to pay — but it will negatively impact your credit score.

Data updated regularly
Name Product Costs Requirements
Accredited Debt Relief
Accredited Debt Relief
Charges and fees vary by the company you're ultimately connected with
Must be at least 18 years old and a legal US resident; additional terms may apply based on services and products used.
This A+ BBB-rated service offers free consultations to lower your monthly payments help you get out of debt faster.
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View details
National Debt Relief
National Debt Relief
15–25% of total enrolled debt
Must have a legitimate financial hardship which is preventing the ability to pay creditors and a minimum of $7,500 in debt.
Get back on your feet with a top-rated company that works with multiple types of debt.
Go to site
View details
Freedom Debt Relief
Freedom Debt Relief
Monthly payment based on enrolled debt, no upfront fees
Must have at least $7,500 in unsecured debt, have a hardship is preventing the ability to pay creditors, and live in a serviced state.
Freedom Debt Relief works to help people with unmanageable, unsecured debt get back on their feet.
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View details
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Before you sign up with a debt relief company

Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And not all companies are transparent about these costs or drawbacks that can negatively affect your credit score. Depending on the company you work with, you might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.

Consider alternatives before signing up with a debt relief company:

  • Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
  • Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
  • Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.

Bottom line

There’s no “best” — especially when it comes to climbing out from under debt. If paying off your smallest debts first keeps you motivated, use our debt snowball calculator to get started. If saving on interest keeps you motivated, use our debt avalanche calculator instead.

And if trying to pay off multiple debts at once isn’t working no matter which method you try, consider a debt consolidation loan so you only have to make one monthly payment, or even a debt relief service to keep yourself out of bankruptcy.

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