Debt Snowball vs. Debt Avalanche — Is There a Difference?

Debt can be crippling and to pay off debt, most people choose between the debt snowball vs. debt avalanche methods to speed up repayment.


Mar. 10 2023, Published 10:21 a.m. ET

A man looking at debt payment methods
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With interest rate hikes, consumers are shelling out more money per month to cover interest rate charges on previous purchases, and it may seem like they’ll never be able to pay off their debt.

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To rid yourself of debt, you need to pay much more than the minimum amount due each month and accelerate payments to get to ground zero quicker.

There are two main strategies people use to settle their debt and they are the debt snowball vs the debt avalanche method.

What is debt snowball vs. debt management?

Two popular ways to pay off debt include the debt snowball and debt avalanche methods. Although both start with a list of debts, the avalanche arranges debt from highest interest rate to lowest, while the snowball arranges debt from smallest balance to highest.

To find out which strategy works best for you, consider how much money you’d save on interest, how much you can pay each month, and how much motivation you need.

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What is the debt snowball method?

The debt snowball method involves paying off your smallest debts first, and then tackling the bigger ones. To get started, make a list of all your outstanding debts from smallest to largest, and then target the smallest one first, by putting as much extra money as you can afford on each payment.

You can then pay the minimum payment on the rest, until you’ve paid off the first debt. Then move on to the next smallest debt and repeat the process.

What are the advantages and disadvantages of the debt snowball method?

The biggest advantages of the debt snowball method are that it helps build motivation because you’ll settle debts faster, and it’s easier to achieve.

Some disadvantages are that it’s more expensive, you incur more interest over time, and it can take longer to become debt free.

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A person calculating their debt
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What is the debt avalanche method?

The debt avalanche method is a debt repayment method where you start paying off the debt with the highest interest rates first, while making minimum payments on the rest.

Once the highest interest rate debt is paid off, the money is then used to target the next highest interest rate debt.

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What are the advantages and disadvantages of the debt avalanche method?

One of the biggest advantages of debt avalanche is by switching the order of your payments, you can save hundreds of dollars in interest. It can also reduce the time it takes to pay off debt.

The debt avalanche method does have its downsides too. It’s harder to stay disciplined and put all your money together to pay off one debt, and it’s easier to lose motivation because it’s a smaller monthly win.

What factors should I consider when choosing a debt repayment strategy?

Source: Getty Images

A stack of credit cards

Both methods are debt repayment plans, which speed up payment of your debt by paying more than the minimum each month. However, if your income is irregular or unstable or you might be in a position to get laid off, you should stick to the minimum payments.

If you’re applying the strategy to a credit card, make sure it’s one you don’t need to use, and take note of debts that may alter your repayment schedule.

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