Debt snowball vs. avalanche: which one should you use?
Both plans start the same way: pay the minimum on every debt, every month. The difference is where your extra money goes.
The debt snowball
Put every extra dollar on the smallest balance first. When it's paid off, add its payment to the next smallest. The payment grows like a snowball as each debt disappears.
- Good for: quick wins that can keep you going.
- Trade-off: you may pay more interest than with the avalanche.
The debt avalanche
Put every extra dollar on the debt with the highest interest rate first, then the next highest.
- Good for: paying the least interest overall.
- Trade-off: the first payoff can take longer if your highest-rate debt is also a big one.
Example (made-up numbers)
Example data These are made-up numbers, not a real person's debts.
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Store card | $600 | 26% | $25 |
| Credit card | $3,000 | 22% | $90 |
| Car loan | $9,000 | 7% | $250 |
In this example, both plans send the extra money to the store card first, because it has both the smallest balance and the highest rate. With these numbers the order stays the same afterward too (credit card, then car loan). When the smallest balance isn't the highest rate, the two plans split: the snowball goes balance by balance, the avalanche goes rate by rate.
How to pick
- If you've tried before and lost steam, the snowball's quick wins may help.
- If your rates are far apart and saving on interest motivates you, the avalanche usually costs less.
- Either one pays debt off faster than paying only the minimums.
Try it in the Moneycapade web beta
The web beta can run either plan. It pays the minimums, puts your extra on one target debt, rolls each paid-off payment into the next, and shows an estimated debt-free date. It accounts for 0% promo rates until the promo ends. It's an estimate based on the numbers you enter or confirm, not a guarantee.
Free: download the Debt Snowball Tracker (printable PDF and spreadsheet).
Join the waitlist for the iPhone and Android apps at moneycapade.app.
General education, not financial advice. For help with your situation, consider a nonprofit credit counselor (look for an NFCC member agency at nfcc.org).
The iPhone and Android apps aren't in the App Store or Google Play yet, and Premium isn't live yet. The free web beta runs in your browser.