Debt snowball vs. debt avalanche
Both methods have you make minimum payments on every debt and put all extra money toward one target debt. When the target is paid off, its payment "rolls over" to the next debt, so your payments grow as you go.
- Avalanche: target the highest interest rate first. This always costs the least interest and is usually the fastest.
- Snowball: target the smallest balance first. You pay off whole accounts sooner, and those quick wins help many people stay motivated.
The comparison table above shows the real difference for your debts. If it is small, pick the method you are more likely to stick with.
Why minimum payments keep you in debt
Credit card minimums are designed to be low, often around 1% to 3% of the balance plus interest. At a typical card APR above 20%, most of a minimum payment goes to interest, so the balance barely moves. Even a modest extra payment can cut years off your payoff.
Ways to speed up your payoff
- Balance transfer card: a 0% intro APR can stop interest for 12 to 21 months, usually for a 3% to 5% transfer fee.
- Debt consolidation loan: a personal loan at a lower fixed rate can replace several high-APR cards.
- Call your card issuer and ask for a lower APR, especially if you have a good payment history.
- Find extra cash: put tax refunds, bonuses and side income toward your target debt.
Frequently asked questions
Which is better, snowball or avalanche?
Avalanche saves the most money. Snowball can feel more motivating because you close accounts sooner. The best method is the one you will follow until you are debt-free.
Should I include my mortgage?
Usually not. Most people focus on high-interest consumer debt like credit cards and personal loans first, and treat the mortgage separately.
Does paying off debt improve my credit score?
Lowering credit card balances reduces your credit utilization, which is one of the biggest factors in your score. Keeping paid-off cards open can also help.
Is debt consolidation a good idea?
It can be if the new loan has a lower rate and you stop adding new card debt. Compare the total cost, including fees, before you switch.
Estimates assume fixed rates, no new charges and monthly compounding. Actual results vary.