Debt Avalanche vs Snowball: Which Pays Off Debt Faster?

The short answer

Both methods work the same way: pay the minimum on every debt, then put every spare dollar on one target debt until it is gone, then roll that money onto the next. The only difference is the order.

• Avalanche: target the highest interest rate first. It always costs the same or less in interest.
• Snowball: target the smallest balance first. You clear your first debt sooner, which many people find easier to stick with.

The Consumer Financial Protection Bureau describes both and gives each a pro and a con rather than declaring a winner. In the example below, the avalanche saves $306 over 20 months. The snowball wipes out the first card 11 months earlier. Which is “better” depends on whether you need the money or the momentum more.

How each method orders your debts

Say you have three credit cards and can put $500 a month toward them in total:

Card	Balance	APR	Minimum payment
Card A	$800	12%	$25
Card B	$4,500	27%	$135
Card C	$2,700	20%	$80
Total	$8,000		$240

The minimums add up to $240, so $260 a month is extra.

• Avalanche order: Card B (27%), then Card C (20%), then Card A (12%).
• Snowball order: Card A ($800), then Card C ($2,700), then Card B ($4,500).

This is the situation where the two methods disagree most: the smallest balance happens to have the lowest rate, and the biggest balance has the highest.

Worked example: same $500 a month, two orders

Each month, interest of balance × APR ÷ 12 is added to every card, every card gets its minimum, and the rest goes to the target card. When a card is paid off, its minimum joins the extra money. The minimums stay fixed at the amounts above, and no new purchases are made.

	Avalanche	Snowball
First card paid off	Card B, month 14	Card A, month 3
Second card paid off	Card C, month 19	Card C, month 11
Last card paid off	Card A, month 20	Card B, month 20
Debt-free	20 months	20 months
Total interest	$1,534.79	$1,841.18

Both plans finish in the same month, but the snowball costs $306.39 more in interest. That is the price of leaving the 27% card for last: for most of the 20 months, the snowball plan carries a big 27% balance while it clears a small 12% one.

The snowball’s advantage is just as concrete. Card A is gone in month 3, and by month 11 you are down to one card. On the avalanche plan you are still paying three cards for more than a year, and your first win comes in month 14.

A few months of the arithmetic, so you can see where the difference comes from: in month 1, Card B charges $4,500 × 27% ÷ 12 = $101.25 of interest, while Card A charges $800 × 12% ÷ 12 = $8.00. Every extra dollar that goes to Card A instead of Card B saves 1% a month instead of 2.25% a month.

When the two methods agree

If your smallest balance also has the highest rate, avalanche and snowball pick the same order and cost exactly the same. A small, high-rate store card is the classic case. Check your list before you agonize over the choice. You may not have one to make.

The gap is also small when:

• your rates are close together (say 22%, 24% and 25%),
• the balances are close in size, or
• your extra payment is large relative to the debt, so everything is gone within a few months either way.

The gap is biggest with a large, high-rate balance and a small, low-rate one, exactly as in the example.

Which one should you choose?

Choose the avalanche if you are confident you will keep going without a quick win, your highest-rate debt is also large, or the interest difference is meaningful to you. The CFPB’s debt booklet puts it as getting rid of the most expensive debt first, with the downside that you might not feel like you are making progress very quickly, especially if that debt is large.

Choose the snowball if you have tried before and stopped, you have several small balances you could clear within a few months, or seeing an account hit zero is what keeps you motivated. The CFPB says you will see progress quickly as you pay off smaller debts, while warning that you may end up paying more in the long run.

A middle path some people use: start with one quick snowball win on a tiny balance, then switch to avalanche order for the rest. Run both orders with your own numbers before deciding, because the cost difference is specific to your balances and rates.

What the example assumes

Real statements will differ a little, for a few reasons:

• Daily interest. The CFPB explains that card issuers charge a daily periodic rate, the APR divided by 360 or 365, on your balance. Monthly interest of APR ÷ 12 lands close for a balance you are paying down, but not to the cent.
• Shrinking minimums. Many card minimums fall as the balance falls. If you pay only the new, lower minimum, the plan slows down. Keeping your total payment at $500 avoids that.
• New purchases. Any new charge adds to the balance and pushes the payoff date back.
• Rate changes. A 0% promotion that ends, or a variable APR that rises, changes the order the avalanche should use.

Common mistakes

• Missing a minimum on a non-target card. Both methods depend on paying every minimum, every month. A late fee or penalty APR undoes months of progress.
• Spreading extra money evenly. Splitting the $260 across three cards is slower and costs more than either method.
• Letting freed-up money drift away. When a card is paid off, its minimum has to roll onto the next target, or the plan loses its speed.
• Ignoring other debts. A payday loan or a car loan with a high rate belongs in the same list as your cards.

When to get help

If the minimums alone are more than you can pay, neither method will work yet. A certified credit counselor can go through your budget with you; the CFPB’s Your Money, Your Goals debt booklet points to usa.gov/debt to find one. If a debt has already gone to a collector, the same booklet points to the CFPB’s sample letters for responding.

To compare the two orders on your own debts, the credit card payoff calculator takes up to six cards and one monthly budget, shows the avalanche and snowball side by side with total interest and debt-free date, and lists the month each card is paid off.

General information, not financial advice. Your card agreements and statements are the final word on interest and minimum payments.