Debt snowball vs. avalanche: which should I use?
The short version: both work. The snowball pays the smallest debt first, so you see progress fast. The avalanche pays the highest interest rate first, so you usually pay less interest. Pick the one you’ll stick with.
The snowball: smallest debt first
Keep making the minimum payment on every debt. Put any extra money toward the smallest debt. You see progress quickly, but you may pay more in the long run.
Source: Consumer Financial Protection Bureau, How to reduce your debt. consumerfinance.gov
The avalanche: highest interest rate first
This focuses on the debt with the highest interest rate, such as a credit card, because it’s costing you the most. The goal is to pay it off as quickly as possible.
Source: Consumer Financial Protection Bureau, How to reduce your debt. consumerfinance.gov
How to choose
If saving the most money motivates you, the highest-interest method might be the right choice. If seeing progress quickly motivates you, consider the snowball.
Source: Consumer Financial Protection Bureau, How to reduce your debt. consumerfinance.gov
Student loans: tell your servicer
When you pay extra on student loans, tell your servicer to apply the extra to your highest-interest loan first. That’s how you get the full benefit.
Source: Consumer Financial Protection Bureau, Tips for student loan borrowers. consumerfinance.gov
What to do next
- List every debt with its balance, interest rate and minimum payment.
- Decide how much extra you can pay each month, even a little.
- Pick snowball or avalanche, and compare both in the demo: it shows your debt-free date and the interest each order costs.
We’re not tax professionals. Always ask your CPA or accountant before making tax decisions.
Try the demo