Is the debt avalanche or snowball better?

The avalanche (highest interest rate first) saves the most in interest. The snowball (smallest balance first) delivers faster psychological wins. The best method is the one you will stick with; the dollar gap between them is often small.

How much does the avalanche actually save?

It depends on your debts. In a typical three-debt example the avalanche saved about $402 versus the snowball with the same payoff date, but the gap grows if you carry a large balance at a very high rate.

Do snowball and avalanche have the same payoff date?

Sometimes, as in the sample above. The order you target debts affects total interest more than the payoff date when balances are similar, but with very different balances and rates the dates can diverge.

Debt

Debt snowball vs avalanche: how much the order matters

Chris has three debts and one very confident group chat. Half of them swear by the snowball: smallest balance first, for the quick wins. The other half say that’s bad math, and the avalanche, highest rate first, saves the most. On a realistic set of debts like Chris’s, the gap between them is smaller than either side suggests.

Same effort, different order

Both methods work the same way. You pay every minimum, put all your extra money toward one debt until it’s gone, then roll that whole payment onto the next. The only difference is which debt goes first. The snowball picks the smallest balance, and the avalanche picks the highest rate.

A worked example

Here are Chris’s three debts: an $8,000 credit card at 22%, a $15,000 car loan at 7% and a $4,000 student loan at 15%, with $300 a month extra to put toward them:

Avalanche: debt-free in 3 yr 2 mo, total interest $4,799
Snowball: debt-free in 3 yr 2 mo, total interest $5,201
Avalanche saves $402

Both finish on the same date here, and the avalanche saves $402, about $11 a month. That’s what all the arguing in the group chat is worth in Chris’s case.

See your exact gap →Free Debt Payoff Planner, no sign-up. Compare the two methods side by side on your own debts.

Which one to pick

The snowball clears that $4,000 student loan early, so one debt is gone within the first several months. For a lot of people, that’s what keeps them going past month four, and sticking with a plan matters more than a small interest saving. If the numbers motivate you, use the avalanche and keep the savings. If crossing debts off keeps you going, use the snowball and think of the small difference as the price of staying motivated. Either way, pick the one you’ll finish.

Where this estimate can be off

The gap grows when you carry a large balance at a very high rate, and then the avalanche can save serious money, so check your own numbers before assuming it’s only a few dollars a month. Either method also depends on not adding new debt while you pay the old debt off.

Figures from TheSharpDollar’s Debt Payoff Planner using its sample scenario. Your result depends on your balances, rates and extra payment.