intajThe short answer
Both methods pay the minimum on every debt and put all extra money on one target. Avalanche targets the highest interest rate and costs the least. Snowball targets the smallest balance and gives you a paid-off debt sooner. If the rates are far apart, use avalanche. If you need a quick win to keep going, use snowball. Either beats paying only the minimums.
How both methods work
- List every debt with its balance, interest rate and minimum payment.
- Decide one fixed amount you can pay each month on top of all the minimums.
- Pay every minimum, then send the extra to one target debt.
- When a debt is gone, add its minimum to the extra and move to the next target.
The only difference is the order of the targets.
Avalanche: highest interest rate first
Sort your debts from the highest rate to the lowest. Every extra payment goes where interest grows fastest, so you pay the least interest in total and usually finish a little earlier. The catch: if your highest-rate debt is also large, the first payoff can take many months.
Snowball: smallest balance first
Sort your debts from the smallest balance to the largest, ignoring the rates. The first debt disappears quickly, and that early win is the point. Many people stay with a plan longer when they can see debts vanish. The cost is some extra interest.
A worked example
Three debts and 200 extra each month, on top of 235 in minimum payments. The numbers are an illustration.
- Store card: 600 at 18 percent, minimum 25.
- Credit card: 2,400 at 22 percent, minimum 60.
- Personal loan: 5,000 at 9 percent, minimum 150.
Avalanche pays the credit card first. It is gone in month 11, the store card in month 12, the loan in month 21. Total interest: about 860.
Snowball pays the store card first. It is gone in month 3, the credit card in month 12, the loan in month 21. Total interest: about 878.
Paying only the minimums would take 45 months and cost about 2,418 in interest.
So in this case the method changes the cost by less than 20, while the extra 200 a month saves more than 1,500 and two years. The habit matters more than the order. The gap grows when one debt has a much higher rate and a large balance.
How to choose
- Rates far apart, and you trust yourself to keep going: avalanche.
- You have tried before and stopped: snowball.
- Balances and rates are similar: either one, the cost is almost the same.
- A debt with a promotional rate that is about to jump: move it to the top before the date.
Common mistakes
- Missing a minimum payment on one debt while attacking another.
- Keeping no buffer, so the next surprise bill goes back on a card.
- Changing the extra amount every month instead of setting it once.
- Not adding a paid-off debt's minimum to the next target.
- Forgetting that a lower rate from a transfer or consolidation can matter more than the method.
Questions
Should I save or pay off debt first?
Keep a small buffer first, even one month of needs, so an emergency does not create new debt. Then put the extra toward the plan.
Does this work with an irregular income?
Yes. Set the extra amount from your fixed monthly salary, not from what arrived this month. In a strong month, a one-time extra payment is a bonus, not a new baseline.
Can I switch methods later?
Yes. Many people start with snowball for one quick win, then switch to avalanche for the rest.
Related guide: how to budget on an irregular income · All guides