Debt Payoff Strategies Explained

When you have multiple debts, the order you pay them off matters. Two popular methods are debt snowball and debt avalanche.

Debt Snowball Method

How it works: Pay minimums on all debts. Put any extra money toward the smallest balance first. When that debt is paid off, roll the payment to the next smallest.

Pros:

• Quick wins when small debts are paid off
• Psychological motivation
• Simplifies your debt list faster

Cons:

• May pay more interest if small balances have low APR
• Not mathematically optimal

Debt Avalanche Method

How it works: Pay minimums on all debts. Put any extra toward the highest APR debt first. When paid off, move to the next highest APR.

Pros:

• Minimizes total interest paid
• Mathematically optimal
• Saves the most money over time

Cons:

• May take longer to pay off the first debt (if it has a large balance)
• Requires discipline without quick wins

Which Should You Choose?

• Choose avalanche if you're motivated by numbers and want to save the most money.
• Choose snowball if you need psychological wins to stay on track.

Our Debt Snowball and Debt Avalanche calculators let you compare both strategies with your actual numbers.