Key takeaways
- Both methods pay every minimum; only the order of the extra payment differs.
- Avalanche (highest rate first) minimizes total interest — mathematically it is never worse.
- Snowball (smallest balance first) trades some interest for early, visible payoffs; the difference has a price you can compute.
Same payments, different order
Start with what the methods share, because it is almost everything: every debt receives its minimum payment every month, and any extra amount goes to a single target debt. When a debt finishes, its freed-up minimum rolls into the next target, so the total attack grows over time. The entire debate is about which debt gets targeted first.
How avalanche works
Avalanche targets the highest interest rate first. The logic is pure arithmetic: the highest-rate balance is the most expensive one to keep, so removing it first minimizes total interest paid. Mathematically, avalanche always wins or ties — no ordering can beat it on cost.
How snowball works
Snowball targets the smallest balance first, regardless of rate. Its logic is behavioral: small balances fall fast, each payoff is a visible win, and visible wins keep people paying extra month after month. The method deliberately trades some interest for momentum.
The difference, in real numbers
Example · two debts, two orders
A card at $6,000 and 22% (minimum $120) plus a medical balance of $2,500 at 5% (minimum $50), with $150 extra each month.
Avalanche (card first): debt-free in 33 months, about $2,022 total interest. Snowball (medical first): 36 months and about $2,817. The early win costs roughly $795 and three extra months here — a price some people find worth paying, now that it has a number.
Choosing yours
If the difference for your debts is small, take the wins — snowball’s motivation costs little. If a large high-rate balance makes the gap wide, avalanche’s savings deserve real weight. And a hybrid is perfectly legitimate: clear one tiny balance for the morale, then switch to rate order. The best plan is the one you actually finish — an abandoned optimal plan costs more than a completed imperfect one.
↑ Back to topOpen Debt in Budget. Model your real debts with both strategies, custom ordering, and the full month-by-month schedule.
Open in Capital Allocation →