What Is Personal FinanceIf you have more than one balance to pay off, the order you attack them in changes how much interest you pay and how motivated you stay along the way.
The two methods
- Debt avalanche: pay minimums on everything, then put every extra dollar toward the debt with the highest interest rate. Once it's gone, roll that payment into the next-highest-rate debt.
- Debt snowball: pay minimums on everything, then put every extra dollar toward the debt with the smallest balance, regardless of interest rate. Once it's gone, roll that payment into the next-smallest balance.
Why avalanche saves more money
Avalanche is always cheaper or equal, because you eliminate your most expensive interest first. Over months or years, this saves real money compared to snowball, especially if one balance carries a much higher rate than the others.
Why snowball works for a lot of people anyway
Paying off a full balance, even a small one, creates a visible win early on. That sense of progress often keeps people sticking with a payoff plan instead of giving up a few months in. If motivation has been your biggest obstacle in the past, snowball's quick wins are worth the extra interest cost.
A simple way to decide
If your balances carry similar interest rates, or you know you'll stay motivated either way, choose avalanche for the lower total cost. If you've abandoned payoff plans before, or one small balance clutters your mental math, snowball's momentum gets you further in practice.
See it with your own numbers
Try our Debt Payoff Calculator or Credit Card Interest Calculator with one balance at a time to see how much interest each approach saves you before committing to a plan.