If you feel like it’s getting harder to pay off debt, you’re right. In recent years, due to higher prices and interest rates, more people have turned to credit cards and loans to cover everyday expenses. That’s one reason credit card debt reached a historical high in 2023.
If you’re struggling to reduce or eliminate debt, willpower alone might not do the trick. Instead of leaving it up to will, try a time-tested strategy like the debt snowball method or the debt avalanche method. Both have their benefits for different scenarios, but each gives you a clear plan of attack for reducing debt.
In This Article
What is the debt snowball method?
With the debt snowball method, you prioritize paying off your debt by starting with the account with the lowest balance first. To use this method, you maintain the minimum payments due on all of your debt accounts but put extra cash toward the one with the smallest balance.
Once it’s paid off, you roll the funds toward the next smallest balance and continue this pattern until your debt is eliminated.
Pros of the debt snowball method
- A better shot at success: You’re more likely to stick to a debt payoff plan when you use the debt snowball vs avalanche method since you’ll see progress sooner.
- Motivation: Eliminating entire accounts up-front can create motivation and keep you engaged.
- Debt consolidation: As you eliminate debt accounts, you’ll have fewer payments to manage.
Cons of the debt snowball method
- Slower: Despite how quickly you can eliminate individual accounts, the timeline to eradicate all of your debt is usually slower than with the avalanche method.
- More expensive: Unlike with the avalanche method, you won’t pay off the highest interest debts first, which means you’ll accumulate more interest charges.
What is the debt avalanche method?
With the debt avalanche method, you prioritize paying off the debt with the highest APR (a number that represents interest plus fees).
To use this method, maintain the minimum payments on all of your debt accounts but put extra cash toward the one with the highest APR. Once that account is paid off, you roll the funds toward the next highest APR account and continue this pattern until your debt is eliminated.
Pros of the debt avalanche method
- More savings: You’ll save money on interest charges by paying off high-interest debt first, especially if there’s a big difference in the APR on your accounts.
- Faster debt payoff: You’ll pay your debt down faster since less interest will accumulate and more of your payment will go to principle.
Cons of the debt avalanche method
- Less motivating: If you owe a large balance on your highest APR account, you might not feel like you’re making progress quickly enough to stay motivated.
- Lower success rate: Some people may give up on this method because it takes longer to reach milestones such as paying off an account.
Debt snowball vs. avalanche: Which method is best?
The debt snowball and debt avalanche methods are similar. With each one, you list your debts in order of priority and then put your excess cash toward the debt with the highest priority.
Both of these methods can work well for managing credit card debt and loans, and they’re far safer than some debt relief options you might have heard about. Still, people tend to strongly prefer one or the other.
If your first priority is saving money, the debt avalanche method is the best choice. It can help you save money by reducing the balances on your high-APR debts first.
The problem with the debt avalanche method (and it’s a big one) is that it’s harder to stick to than the snowball method.
With the snowball method, you hit a big milestone—paying off an account—sooner. If motivation is your biggest obstacle to eliminating debt, the snowball method could be your best choice.
| Debt snowball is best for you if… | Debt avalanche is best for you if… |
| Your debt accounts have a small range of APRs | You have a wide range of APRs on your debt |
| You need motivation to pay off debt | You want to save money on interest charges |
If at first you don’t succeed…
Both of these strategies have pros and cons, and no one can predict which will work best for you. Whichever one you choose, know that you’re not stuck with it forever.
Just like with budgeting methods, trying and failing at either the debt snowball method or the debt avalanche method doesn’t mean you have to give up. Instead of throwing in the towel, try the other method next, or even consider a whole different strategy like debt consolidation.
Written by Sarah Brady | Edited by Rose Wheeler
Sarah Brady is a financial writer and speaker who’s written for Forbes Advisor, Investopedia, Experian and more. She is also a former Housing Counselor (HUD) and Certified Credit Counselor (NFCC).
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