Debt Snowball vs. Debt Avalanche: which method is better to pay off your debt?

With so ways that can lead you into debt in a finance world, there are top techniques which can help you conquer your money goals and pay off debt fast. These effective ways are avalanche method and the debt snowball method.

Both of them can help you get rid of debt, however, debt snowball allows taking start with smallest debt and letting you enjoy quick wins. On the other hand, debt avalanche attacks your debt with the highest interest rates.

The Debt Snowball Method

Introduced by David Ramsey, the debt snowball method is among the most talked about tactics to reduce debt.  Below are few steps to show how debt snowball works:

  1. You start paying off the smallest debt first, and you make minimum payments on everything else.
  2. Once you’ve paid off it, add the freed-up money to debt with the smallest balance.
  3. Once it’s paid off, take that leftover money and add it to previous monthly payment on your next-smallest debt.

The secret here is that you incur a small win right away. Even, it may allow to get rid of your little debts within few months. And when it comes to pay larger debts such as looming student loan, you will feel more confident and less intimidated about it.

The Debt Avalanche Method

Being similar to debt snowball method, the main point that sets apart debt avalanche is the order of paying debts. Rather than paying by smallest balance, you pay from highest interest rate to lowest.

  1. Organize your debts in order from the highest to the lowest interest rate.
  2. Start with paying the least on all the debts.
  3. Pay down your highest interest debt.
  4. Once it’s paid off, you put that extra money towards the one with the highest interest rates.
  5. Once you’ve paid off your highest interest debt, focus your efforts on your next highest interest rate debt, and so on until you pay your lowest interest debt.

Mathematically, debt avalanche makes more sense.

Which method is better for you?

You might wonder which method is better for you. Well, before we get into it, the best method for paying off your debt is whichever one works for you.

There’s no right answer to which one is best. While, some comes out in favor of avalanche method by thinking that math rules over all, there are some financial experts who have zealous opinions regarding debt snowball. According to experts, you stay more motivated when you opt for paying smaller debts first. Moreover, it’s all your personal finance. You know it better which way to choose to tackle your debts.

Still, if you want to understand which method can help you save more money, here are some suggestions:

It all comes down to Math

The best thing you can do is make a list of all your debts with their balances and interest rates. Look at which method is costing you more money. Lay out the math, and make a logical decision even when it’s not based on motivation.

Dig into the numbers

These two methods works similar in a way that they both ask you to pay least payments. In addition, when it comes to total interest difference and duration, there’s no significant difference between the two.  The only thing that you should be bothered about is your account balances and difference in interest rates.

Make the rational choice if you can

Goal is to tackle the debt as quickly as possible. However, if one of the approaches can help you save thousands, start with that strategy. It can help you stick longer with your plan and could be a great way to stay motivated.

Keep tabs on your motivation level

Is it possible to use combination of methods over time? If you feel like you’re losing enthusiasm using debt avalanche method, you may pay off smaller debts just to buoy up.

Focus on one account at a time

Research proves that if you work by paying extra on one account, it may create a substantial difference. This is because it allows paying off debt more quickly and help you progress in your financial life. No matter how you opt to order your accounts, focus on paying down just one at a time.

Stick to it!

Tackling with debt is a tough task. Whatever plan you choose, they are bound to free you out of debt. Its better you stick to it long-term. This way you will see positive results gradually.

Other strategies to pay down debt quickly

Apart from the avalanche and debt snowball, there are many approaches that you can implement to pay off debt and save money on interest payments.

Taking benefit of balance transfer and debt consolidation are few alternative ways to pay off debt. Since these financial strategies reduce your monthly payment and help you save more than compared to debt avalanche.

Here are some effective alternatives to the debt avalanche method:

Ask your creditors to lower the interest rate

Best deals come with negotiating. If you have negotiating skills, it can help you to become debt free sooner. Call your creditors and ask them the proper way to lower down the rates.

Consider consolidating debt with a personal loan

Consider a personal loan if you want relief from debts. If the loan comes with lower APR than your debt, it becomes easier to pay off those debts. What’s more you want than being able to pay for a single monthly payment at lower interest rate. Personal loans also works best for consolidating credit card or medical debt.

So, rather than acquiring student loan debt, look for ways to refinance with a private loan or consolidate through Department of Education.

Seek for a 0% intro balance transfer offer

Will you believe that opening a new credit card account may help you eliminate your debts? Well, generally balance transfers occur when you have lots of credit card balances to pay down. This is because when you transfer some or all of credit card balance to a card at lower interest rate, it can save you hundreds or even thousands on interest payments.

The ideal way to transfer your balance would be to open a new credit account at 0% APR balance transfer offer. The offer usually lasts for a set period of time, around several months. During this duration, you will have plenty of time to pay out the interest-free balance.

Many credit card companies charge a minimum transfer fee to provide you with balance transfer services. So, take it into account as well. You will be required to pay about 3-5% fee of the balance you transfer.

Build an emergency fund

To avoid falling back to the debt cycle, having an emergency fund is a must. So, make sure you have a saving account in place. This is designed to prevent you relying on debt when unexpected accident or a financial shortfall occurs.

Lastly, don’t take on new debt

Debt is bad for you. And, if you keep on accumulating new ones, it will only make things worse for you.


In the end, remember that staying debt-free can demand more than just selecting the debt payoff strategies.