Debt Avalanche vs. Snowball Method: Which Saves More Money?
The definitive comparison with real numbers to help you choose the best strategy for your situation.
In This Guide
If you're ready to pay off debt, you've probably heard of two popular strategies: the debt avalanche and the debt snowball. Both work, but they take different approaches. One saves you more money. The other might keep you more motivated. Here's how to decide.
What is the Debt Avalanche Method?
The debt avalanche method prioritizes debts by interest rate. You pay off your highest-interest debt first, then the next highest, and so on.
Avalanche Method Steps:
- List all debts from highest to lowest interest rate
- Make minimum payments on all debts
- Put every extra dollar toward the highest-interest debt
- When that's paid off, roll that payment to the next highest-rate debt
- Repeat until debt-free
Why it works: Interest is what makes debt expensive. By attacking your highest-rate debt first, you minimize how much interest accrues on your total balance. This mathematically saves you the most money.
What is the Debt Snowball Method?
The debt snowball method (popularized by Dave Ramsey) prioritizes debts by balance size. You pay off your smallest debt first, regardless of interest rate.
Snowball Method Steps:
- List all debts from smallest to largest balance
- Make minimum payments on all debts
- Put every extra dollar toward the smallest balance
- When that's paid off, roll that payment to the next smallest debt
- Repeat until debt-free
Why it works: Psychology matters. Paying off that first small debt gives you a quick win. That motivation can help you stick with the plan long-term. Research from Harvard Business School found that people who focus on small wins are more likely to complete their debt payoff journey.
Side-by-Side Comparison with Real Numbers
Let's use a real example. Say you have these debts and can pay $500/month total:
| Debt | Balance | APR | Min Payment |
|---|---|---|---|
| Credit Card A | $5,000 | 24.99% | $100 |
| Personal Loan | $8,000 | 12% | $150 |
| Medical Bill | $2,500 | 0% | $50 |
| Total | $15,500 | - | $300 |
With $500/month available ($200 extra beyond minimums), here's how each method plays out:
Avalanche Method Results
Snowball Method Results
The Difference:
In this example, the avalanche method saves $565 in interest and gets you debt-free 1 month sooner. However, with snowball you'd pay off your first debt in 5 months vs. 11 months with avalanche.
Which Should You Choose?
The best method depends on your personality and financial situation:
Choose Avalanche If:
- ✓ You're motivated by saving money
- ✓ You have high-interest debt (20%+ APR)
- ✓ You're disciplined and can stick to long-term plans
- ✓ Math and logic drive your decisions
Choose Snowball If:
- ✓ You need quick wins to stay motivated
- ✓ You've struggled to stick with budgets before
- ✓ You have multiple small debts to eliminate
- ✓ Emotions play a role in your financial decisions
The Hybrid Approach: Best of Both Worlds
You don't have to choose just one. Many financial experts recommend a hybrid approach:
- Start with snowball - Pay off 1-2 small debts first to build momentum and free up cash flow
- Switch to avalanche - Once you've had some wins, shift focus to the highest-interest debt
- Stay flexible - If motivation drops, knock out a small debt for a quick win
Pro Tips for Either Method:
- 1. Automate your payments - Set up automatic minimum payments on all debts so you never miss one
- 2. Throw windfalls at debt - Tax refunds, bonuses, and side hustle income should go straight to your target debt
- 3. Track your progress visually - Use our calculator or a spreadsheet to see your debt shrink over time
- 4. Don't add new debt - Cut up credit cards or freeze them in ice if needed
Calculate Your Payoff Plan
Ready to see exactly when you'll be debt-free? Our free debt payoff calculator lets you compare both methods with your actual debts.
Try Our Free Debt Payoff Calculator
Enter your debts and instantly compare avalanche vs. snowball results.
Calculate Your Payoff DateFrequently Asked Questions
How much can I really save with the avalanche method?
It depends on your interest rates and balances. Typically, you'll save 5-20% on total interest paid. The bigger the rate difference between your debts, the more you save.
Does the snowball method cost me a lot more?
Not always. If your debts have similar interest rates, the difference is minimal. The extra interest might be worth it if snowball helps you stay motivated and actually finish paying off debt.
What about balance transfer cards?
A 0% APR balance transfer can supercharge either method. Move your highest-rate debt to a 0% card, then use avalanche to attack the remaining high-interest debt.
Should I save an emergency fund first?
Yes! Most experts recommend saving $1,000-$2,000 for emergencies before aggressively paying debt. This prevents you from going back into debt when unexpected expenses hit.