Avalanche or snowball? Two ways to pay off debt, tested on the same budget
Avalanche vs snowball, tested on one $550 budget: paying the highest rate first saved about $262; the smallest balance first cleared a debt in five months.
In this article
If you owe money on several accounts and have a little extra to put toward it each month, you face a simple question with a surprisingly big effect: which debt gets the extra money first?
The two best-known answers are the avalanche and the snowball. Both start the same way: pay the minimum on everything. The avalanche vs snowball choice comes down to where the extra goes.
- Avalanche: extra money goes to the debt with the highest interest rate. When it’s gone, move to the next-highest rate.
- Snowball: extra money goes to the smallest balance. When it’s gone, roll that payment into the next-smallest.
The setup
We ran both methods on the same three debts with the same budget of $550 a month:
| Debt | Balance | APR | Minimum payment |
|---|---|---|---|
| Medical payment plan | $1,200 | 8% | $50 |
| Credit card A | $3,500 | 27% | $105 |
| Credit card B | $6,200 | 22% | $170 |
The minimums total $325, which leaves $225 a month extra. To keep the comparison clean, we assumed the minimum payments stay fixed and no new charges are added.
Avalanche results
The extra $225 goes to card A, the 27% card. It’s paid off in month 13. That money then moves to card B. Everything is paid off in month 25, with about $2,655 in total interest.
Snowball results
The extra $225 goes to the medical payment plan, the smallest balance. It’s gone in month 5. Card A follows in month 15, and everything is paid off in month 26, with about $2,917 in total interest.
Avalanche vs snowball: which one wins?
On paper, the avalanche: about $262 less interest and one month sooner. The gap grows when rates are farther apart or balances are larger.
But the snowball’s first payoff came eight months earlier. For a lot of people, closing out an account in five months is what makes the plan feel real. If an early win is what keeps you from giving up in month four, it’s worth more than $262.
A few ways to decide:
- Pick avalanche if you’re motivated by the math and your highest-rate debt isn’t huge.
- Pick snowball if you’ve started payoff plans before and lost steam, or if you have one or two small balances you could clear quickly.
- Mix them. Knock out one tiny balance first for the quick win, then switch to the avalanche.
Make either plan work
- Stop adding to the balances. Neither method works if new charges keep coming in. Take the cards out of your phone’s wallet if you need to.
- Automate the minimums so nothing is ever late, and make the extra payment by hand each month.
- Ask for a lower rate. If you’ve paid on time, call each card issuer and ask. A lower APR helps under either method.
- Use windfalls. Tax refunds, bonuses and any extra paychecks go straight to the target debt.
Want to see your own numbers? Our credit card payoff calculator shows how long a balance takes to clear at a given payment. If your rates are high across the board, debt consolidation may also be worth a look.
Before you start, save one month of minimums
An aggressive payoff plan is fragile if one car repair sends the cards straight back up. Before directing every spare dollar to the target debt, keep at least one month of minimum payments in checking or savings. It is not a full emergency fund; it is enough to keep the plan intact when timing goes wrong.
Then choose the order once and write it down. Re-ranking the debts every month creates busywork and makes it tempting to chase whichever balance feels most annoying that day. Revisit the order only when a rate changes, a promotional period ends or a new collection risk appears.
Sources
About this article. This is general information, not personal financial advice. Rates, fees and rules can change after publication, so confirm current terms with the lender. Read our editorial standardsand advertising disclosure. First published .
