Snowball vs Avalanche: Which Debt Payoff Method Wins?

You've got multiple debts — credit card, car loan, personal loan — and you want to pay them off as fast as possible. Two popular strategies exist: the debt snowball and the debt avalanche. Here's how they compare.

The Avalanche Method (Mathematically Optimal)

Pay minimum repayments on all debts, then throw every extra dollar at the debt with the highest interest rate first. Once it's paid off, redirect that entire payment to the next-highest-rate debt, and so on.

Why it works: by targeting the most expensive debt first, you minimise the total interest you pay. On a typical mix of credit card (20%), personal loan (12%), and car loan (7%), avalanche saves hundreds or even thousands more than snowball.

The Snowball Method (Psychologically Optimal)

Pay minimum repayments on all debts, then throw every extra dollar at the debt with the smallest balance first. Once it's paid off, redirect that payment to the next-smallest balance.

Why it works: you get quick wins early. Crossing a debt off the list in 2-3 months feels incredible and keeps you motivated. Research from Harvard Business School found that people using the snowball method are more likely to actually become debt-free because the psychological momentum keeps them going.

Which Should You Choose?

If you're disciplined and motivated by numbers, avalanche saves more money. If you need momentum and quick wins to stay on track, snowball has a higher completion rate. The interest difference between the two methods is often smaller than people expect — especially if your debts have similar rates.

The truth: the best method is the one you'll actually stick with. Paying off debt in any order is infinitely better than paying minimums forever.

Once your debts are cleared, redirect those payments into investments — our Compound Interest Calculator shows how fast your money grows when it's working for you instead of against you.