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Compare snowball vs. avalanche debt payoff strategies side by side
The debt snowball method pays off debts from smallest balance to largest for quick psychological wins. The avalanche method targets the highest interest rate first to minimize total interest paid. Both use extra payments that "roll" into the next debt as each is eliminated.
Snowball
59 mo
Interest: $4,609.10
Avalanche
55 mo
Interest: $4,356.28
Avalanche saves $252.82 in interest
Total Debt
$28,000.00
Monthly (min + extra)
$750.00
| Feature | Snowball | Avalanche |
|---|---|---|
| Priority | Smallest balance | Highest rate |
| Interest saved | Less optimal | Maximum |
| Motivation | Quick wins | Slower wins |
| Best for | Staying on track | Saving money |
Formula
Monthly Interest = Balance × (APR ÷ 12 ÷ 100)Balance = Current remaining balance on the debt
APR = Annual percentage rate of the debt
Extra Payment = Amount above total minimums applied to priority debt
Worked Example
Three debts with $200 extra monthly payment
Did you know? According to a 2016 Harvard Business Review study, people who used the snowball method were more likely to successfully eliminate all their debt because the quick wins from paying off small balances kept them motivated (source: Harvard Business Review).
Sources
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