Best for: Anyone carrying credit card balances, student loans, or car payments.
You have multiple debts. Credit cards, student loans, car payments, maybe a personal loan. You want them gone, but you can only throw so much money at them each month.
So which one do you pay off first?
There are two main strategies: the Avalanche method and the Snowball method. One saves you more money. The other gives you faster wins. Both work if you stick with them.
The Avalanche Method: Pay Least Interest
The Avalanche method says pay off your highest-interest debt first while making minimum payments on everything else.
Here’s why it works: high-interest debt costs you the most money. Every month you carry a balance at 22% interest, you’re paying 22% for the privilege of having borrowed that money.
Pay off the 22% credit card before the 6% car loan, and you save more money in interest over time.
Example:
- Credit card 1: $5,000 at 22% interest
- Credit card 2: $3,000 at 18% interest
- Car loan: $12,000 at 6% interest
- Student loan: $20,000 at 4% interest
You have $1,000 per month for debt payments after covering all your minimums.
With Avalanche, that extra $1,000 goes to the 22% credit card first. Once that’s gone, you attack the 18% credit card. Then the car loan. Then the student loan.
This saves you the most money in interest charges.
The Snowball Method: Pay Smallest Balance
The Snowball method says pay off your smallest debt first, regardless of interest rate.
Here’s why it works: humans need wins. Paying off a $1,200 credit card in two months feels good. That motivation keeps you going.
With Snowball, you pay minimums on everything and throw all your extra money at the smallest balance. Once that’s gone, you roll that payment into the next smallest debt. The amount you’re paying toward debt “snowballs” as you knock out balances.
Same example:
- Credit card 1: $5,000 at 22% interest
- Credit card 2: $3,000 at 18% interest
- Car loan: $12,000 at 6% interest
- Student loan: $20,000 at 4% interest
With Snowball, that extra $1,000 goes to the $3,000 credit card first, even though the $5,000 card has a higher interest rate. Once the $3,000 card is paid off, you attack the $5,000 card. Then the car loan. Then the student loan.
You’ll pay slightly more in interest over time, but you get that first win faster.
Which One Actually Saves More Money?
Avalanche wins on math. You pay less total interest.
But the difference is usually smaller than you think. If your highest-interest debt also happens to be one of your larger balances, the psychological cost of waiting months for your first payoff might outweigh the interest savings.
Real numbers:
Let’s say you have three debts:
- $8,000 at 20% (minimum $200/month)
- $3,000 at 18% (minimum $75/month)
- $2,000 at 15% (minimum $50/month)
You have $1,000 per month total for debt payments.
Avalanche: Pay $725 to the $8,000 debt, minimums on the rest. Takes 13 months to clear all debt. Total interest paid: $1,847.
Snowball: Pay $675 to the $2,000 debt, minimums on the rest. Takes 14 months to clear all debt. Total interest paid: $1,923.
The difference is $76 over 14 months. That’s real money, but it’s not life-changing money.
When to Use Avalanche
Use Avalanche if:
- You’re motivated by logic and math
- The interest rate differences are significant (22% vs. 6%)
- You won’t lose momentum if your first payoff takes 6-12 months
- You want to minimize the total cost of your debt
Avalanche is the objectively correct choice if you’re only optimizing for money. But humans aren’t optimizing machines.
When to Use Snowball
Use Snowball if:
- You need quick wins to stay motivated
- Your debts have similar interest rates (all between 15-22%)
- You’ve tried to pay off debt before and quit because it felt hopeless
- The psychological boost of eliminating accounts is worth more to you than $50 in interest
If you’re someone who gets discouraged easily, Snowball is probably the better choice. A paid-off account is a concrete win. “I saved $8.37 in interest this month” is not.
The Hybrid Approach
Some people combine both methods. They Snowball their way through a few small debts to build momentum, then switch to Avalanche for the big ones.
For example:
- Pay off the $500 medical bill (Snowball)
- Pay off the $1,200 credit card (Snowball)
- Switch to Avalanche for the remaining $8,000 card and $15,000 student loan
You get some early wins without completely ignoring the math on your larger, higher-interest debts.
This is not the most efficient method, but it might be the most realistic for your personality.
What About Low-Interest Debt?
If you have a 3% car loan or a 4% student loan, you might not want to pay those off aggressively at all.
Mathematically, you’re better off making minimum payments and investing the extra money. Historical stock market returns average around 10% per year. If your debt costs you 3% and your investments earn 10%, you come out ahead by investing instead of paying down the debt.
But that assumes you’ll actually invest the money instead of spending it. And it assumes you can handle carrying debt without it stressing you out.
Some people hate having debt regardless of the interest rate. If that’s you, pay it off. The emotional benefit is worth more than the mathematical optimization.
The One Thing Both Methods Require
Neither method works if you keep adding new debt.
If you’re paying $1,000 a month toward your credit cards but also charging $800 a month in new purchases, you’re making progress at $200 per month. That’s slow and demoralizing.
Stop using the cards you’re trying to pay off. If you can’t do that, cut them up. You can’t outrun a debt problem while simultaneously creating more debt.
How to Accelerate Either Method
Both Avalanche and Snowball get faster if you can throw more money at debt. Here’s how:
Increase income: Pick up a side gig, ask for a raise, sell stuff you don’t use.
Cut expenses: Cancel subscriptions, meal prep instead of delivery, delay purchases for 30 days to see if you still want them.
Use windfalls: Tax refunds, bonuses, birthday money. All of it goes to debt.
Even an extra $200 per month makes a significant difference. A $5,000 debt at $300/month takes 20 months to pay off. At $500/month, it takes 11 months.
What About Balance Transfers?
If you have good credit, you might qualify for a 0% balance transfer credit card. You move high-interest debt to the new card and pay no interest for 12-18 months.
This is a smart move if:
- You can pay off the balance before the 0% period ends
- You won’t use the old card once it’s paid off
- The balance transfer fee (usually 3-5%) is less than the interest you’d pay
If you transfer $5,000 to a 0% card for 18 months, you pay a $150-250 fee but save hundreds in interest charges. Just make sure you pay it off before the rate jumps to 22% or whatever the post-promotional rate is.
The Bottom Line
Avalanche saves you the most money. Snowball gives you faster psychological wins.
The best method is the one you’ll actually follow. If you’ve tried Avalanche before and quit after three months because it felt like you weren’t making progress, try Snowball this time.
And if you’re not sure, start with Snowball. Knock out a few small debts to build momentum. If you’re still motivated after that, switch to Avalanche for the bigger ones.
The worst strategy is bouncing between methods or giving up entirely because you picked the “wrong” one.
Just pick one and start. You can always adjust later.