Debt snowball vs. debt avalanche: How to pay off your debt

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Debt snowball vs. debt avalanche: How to pay off your debt

When you've accumulated debt across multiple loans and credit cards, paying off your balances can seem very distant and daunting. The first thing you want to do is remain optimistic. You can do this! With your new go-get-'em attitude, the next thing you want to do is strategize a practical repayment plan that is going to work for you.

The two most popular strategies both involve making the minimum payments on all of your accounts while aggressively paying down one account at a time. The difference is how each plan chooses to prioritize the accounts that get paid down first:

Debt Snowball

The Debt Snowball method involves paying off your smallest balances first to create momentum and encourage you to keep slaying those debts. This strategy empowers you to stay on track by helping you view your debt as more manageable and less intimidating every step of the way:

  • At the onset, you're going to be paying off cards as quickly as possible, since you're focusing all of your extra money on the smallest balance you owe. If you're paying on five accounts every month, but can completely pay off two of them within a year, you can cut the number of bills you have to keep track of almost in half! Juggling fewer payments can reduce stress and your larger balances will be easier to cope with when they're the only bills you have to worry about.
  • Each time you pay off a debt, you have one fewer minimum payment to make. As you whittle away at your smaller debts, you can take the money that was going toward your minimum payments and fold it in to make larger payments on your larger balances. If you have five debts and each one has a $25 minimum payment, by the time you're tackling your largest debt, you'll have an extra $100 to put towards it every month.

The debt snowball plan helps you build confidence and positive repayment habits by prioritizing the "easy" debts first. Having a few victories under your belt could be just what you need to pump yourself up to tackle your largest debts.

Debt Avalanche

The Debt Avalanche method involves paying off your balances with the highest interest rates first. This plan prioritizes efficiency and aims to be the indisputably cheapest and fastest way to get out of debt.

  • Paying your highest interest balances first saves you money. There's no getting around the fact that high interest costs you, especially when you carry a balance long enough for your interest to compound. When this happens, the interest you've already been charged gets added to your principal balance, so you'll be charged interest on it.
  • Paying your highest interest balances first saves you time. The longer it's going to take you to pay off your debt, the more you will benefit from the avalanche. When you don't pay off your high interest debts first, they will continue to accrue and compound interest, increasing faster than your lower interest debts would in the same amount of time. Depending on the details of your personal financial situation, not only can the snowball cost you thousands in interest, it can also cost you months of repayment.

If saving money is the only motivation you need, think about trying out this strategy.

Which plan is right for you?

From a strictly financial standpoint, the debt avalanche technique is always going to cost you less than the debt snowball would. Nevertheless, the time and money you stand to save by using the avalanche does you absolutely no good if you can't maintain the motivation to follow it through to the end.

Take a hard look at your personal financial situation and be very upfront with yourself. If you find it easy to defer instant gratification in favor of future benefits, then debt avalanche is probably going to be the repayment plan for you.

But if you find it difficult to stay focused on long-term goals, and especially if you've had a hard time paying down large balances in the past, debt snowball can be a great way to build responsible repayment habits through small, manageable steps.

Don't forget that you have flexibility.

If you're feeling especially confident with the snowball method, you can always choose to tackle your highest interest rate next, even if it isn't the next smallest balance. And if you start to feel yourself slipping, you can always refocus on your smallest balance again.

Another tool that can help you navigate repayment is using a balance transfer offer. If your credit has improved since you received your first line of credit, you might be eligible to transfer those old, high interest balances to a new low-interest card. Just make sure that you fully understand a balance transfer offer before you decide to apply.

Whichever plan you choose, use it to the extent that it's useful to you, and know yourself well enough to acknowledge when it isn't working. Your ultimate commitment is to paying down your debts, to yourself and to your future.

About the Author: has been a Member Support Specialist at Credit Karma since December 2013. She can usually be found riding bikes around town late at night, communing with animals and eating sweets.

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1 Contribution
33 People Helped

Helpful to 33 out of 34 people

Personally I am using a hybrid method.  I am utilizing the snowball to get the medical debt paid down but I am also tracking the monthly interest that I pay on every card.  When I pay off a card with a low balance I take that payment and add it the card that is costing me the most monthly interest.  It has been almost a game to see the interest paid go down, watching these numbers really helps me to remain motivated.

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1 Contribution
16 People Helped
Helpful to 16 out of 16 people

I like your plan ajakyn.  You are saving interest fees by diverting some of the snowball money while remaining motivated watching the numbers and seeing the proccces as a game.  Congrats.

Soon you will be playing a different game of what investments you will use your previous debt payments on.  Whatching your portfolio numbers is much more fun.  They have way cooler charts and graphs and when you do good, you get to keep the money,  

1 Contribution
12 People Helped

Helpful to 12 out of 15 people

i dont undersand why my scores are droppng when i am making an extra 5 to 10 dollars more on the minum payments and on time which is a week or two weeks earlier.

8 Contributions
57 People Helped

Helpful to 31 out of 33 people

The debt snowball is awesome! Smallest debt first forthat gazelle intensity (yes I did it!) Then to the next one. It's awesome! DaveRamsey all the way.

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13 Contributions
97 People Helped
Helpful to 9 out of 11 people

The snowball method is only good if the interest on all debt is similar.  However, if the interest rates vary significantly, it is far better to pay the debt with the highest interest first.  This reduces the amount of your payments going to interest and increases the amount paying down the loan balance.   

4 Contributions
39 People Helped

Helpful to 2 out of 2 people

What should I do? I have a credit card with $1500 balance on it and a personal loan that has $675 on it. Paying down the credit card will help with intrest and utization rates but the loan I could pay off quicker technically. The problem with paying off the loan early is that I havent even been paying on it for a year yet, so I wont have much payment history on it. I'm in the process of trying to rebuild my credit.

1 Contribution
9 People Helped

Helpful to 9 out of 9 people

I'm currently opting for the "Snowball Avalanche" method.  Since I have several student loans at the same 6.8% interest rate (currently my highest interest rate), I'm choosing to tackle the smallest loan of the highest interest rate first.  The plan is to continue the "smallest loan of the highest rate" strategy for each level of interest rate as I move forward.  That way, I get the satisfactioin of a few "Paid in Full" confirmations as well as tackling the highest interest rate loans.

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8 Contributions
57 People Helped
Helpful to 12 out of 14 people

Debt snowball is the way to go. Smallest debt to largest. You should be out of debt in no time. That's awesome. Listen to

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7 People Helped

Helpful to 7 out of 10 people

A really tricky calculation is when you owe a lot of money on a card with a relatively low interest rate, and you owe a much smaller amount of money on a card (or cards) that has a higher interest rate.  It's hard to decide what to do:  even though the high balance card has low interest rate, you still pay more interest because of the large amount of money owed.  Guess you have to decide what is your goal:  wiping out an entire card's balance, or paying minimal interest.  My heart wants to see a zero balance on my cards, but my head says it's smarter to get balances lowered as much as possible so that I'm paying back what I spent, rather than just giving the bank my interest payments. 

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19 Contributions
77 People Helped
Helpful to 9 out of 13 people

So laxl, STOP SPENDING!  Carry a Debit Card or cash.  I have a similar delimma;  I am down to just one Credit Card with a balance of $7645 at a blended rate of 3.34% until the balance is paid in full OR paying down a Fixed Equity Loan that has a balance of $18123 at 7.5%?

I should have the CC paid in full in 18 months + or -.  If I sent the same extra money for the FEL, it would take about 36 months + or -.

What keeps me leaning and paying 4x the minimum payment on the CC is it is unsecured credit which is worse than secured credit and I can write of the small interest on my taxes.

I'm still maying $85 extra a month on the Home Equity Loan.  For the money I would save verses the cost of refinancing such a small amount, and the hassle factor, it would not be worth it to me.

2 Contributions
0 People Helped

I see what JoeHx is saying but you should never cancel your cards. Instead, either put them somewhere you wont be tempted to use them or destroy the cards all together. Out of sight, out of mind is usually enough for people but then again, it ultimately depends on the self control of the indivudual. 

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Has anyone used a home equity line of credit to pay off credit cards? I've been offered a variable rate or a fixed rate and, with the economy as it is, think the fixed rate might be the best. Any advice appreciated.

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Helpful to 1 out of 2 people

i just used a HELOC (Home Equity Line of Credit) to pay off a substantial amount of student debt, 3.something variable. i think it will be well worth it as it will save me $thousands of interest per year

paying off credit cards with a HELOC is a dangerous game. people do this all the time and end up racking up a balance on the credit cards again. if you do this, i highly recommend you cancel the cards as soon as you pay them off. make sure that the HELOC has a better interest rate than the credit cards (it most likely will) and that the payments will be about the same as the credit cards

alternatively you could make an appointment with an NFCC volunteer ( to negotiate a payoff plan for the credit cards with a much better interest rate, plus you wouldn't have to risk your house

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Enter Your ReplyI see what JoeHx is saying but you should never cancel your cards. Instead, either put them somewhere you wont be tempted to use them or destroy the cards all together. Out of sight, out of mind is usually enough for people but then again, it ultimately depends on the self control of the indivudual. 

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