Debt snowball vs avalanche

The snowball and avalanche methods work the same way except for one choice: which debt gets your extra money. Pay the minimum on everything, put the extra on one target, and when that debt is gone, roll its payment to the next. The methods differ only in how they pick the target.

• Snowball: smallest balance first (ties go to the higher APR).
• Avalanche: highest APR first (ties go to the smaller balance).

Same debts, both methods

Three cards: Small ($500, 12%, $25 minimum), Medium ($1,000, 24%, $30 minimum) and Large ($2,000, 18%, $50 minimum). We pay $100 extra, so $205 every month. The figures below come from the same engine as our snowball and avalanche calculators.

Avalanche finishes 1 month sooner and costs $45.42 less interest, because the extra money sits on the 24% card first. Snowball clears its first debt in month 5, against month 9 for avalanche, so you close an account sooner.

Notice that the payoff order is not always the same as the target order. In the avalanche run, the Small card's balance is low enough that its own minimum finishes it before the Large card clears.

When the two methods tie

If your smallest balance also has your highest rate, both methods pick the same targets. Take A ($300, 24%, $20 minimum), B ($800, 18%, $30) and C ($1,500, 12%, $40) with $50 extra ($140 a month). Both clear A, then B, then C in 21 months with $339.70 interest — identical .

How to choose

• Run both calculators on your real debts. If the difference is small, pick the one you will stick with.
• If one debt has a much higher rate than the rest, avalanche saves more.
• If you have several small debts, snowball removes them faster and leaves fewer payments to manage.
• Whichever you choose, pay every minimum on time. Missing one costs more than any method saves.

Struggling to cover even the minimums? The CFPB recommends contacting your lenders early. See how to pay off debt fast for the options.