Best Ways to Pay off Debt: Snowball vs Avalanche

Debt plays a big part of many American’s lives. Back in 2016, the American household had over $16,000 in credit card debt. While that number has dropped over the last few years, it’s still a burden than over 40% of households have to deal with.

But when it comes to paying that debt back, what is the best way to do so? Is there any sort of strategy you should follow?

Example Scenario

Say that we have 5 different that’s that we needed to pay off. We can list them as such:

  • $500 (18% interest)
  • $2,950 (12% interest)
  • $1,657 (14% interest)
  • $3,292 (21% interest)
  • $900 (25% interest)

So how should you pay these debts off?


The first method what is called the snowball method. The snowball method is built upon the concept of rolling up a snowball, you start small, and by the end, you’ll have a huge snowball effect. Relating it back to debt payoff, we list our debts in order from smallest to largerest. From there, we pay off the smallest debt first, and the minimum on every other payment. Once we pay off the first debt, we used the money that we would use to pay off the first debt, to pay the second debt, plus minimums for the rest. Eventually, you’ll be able to make big payments on the larger debts. 

The snowball method actually isn’t the most efficient way to pay off the debts. However, it does do the most as far as feeling good about paying off debts. It allows the user to stay motivated, if they need that, and helps them stay on track as they see their overall debt accounts go down. 

If we organized our example, it would look like this: 

  1. $500 (18% interest)
  2. $900 (25% interest)
  3. $1,657 (14% interest)
  4. $2,950 (12% interest)
  5. $3,292 (21% interest)


The second method of paying off debts is the avalanche method. The avalanche method is similar to the first. We do organize our debts, however, we only pay attention to the interest rates of our debts. From there, we organize our debts from largest interest rate to smallest. Because the larger the interest rate, the more we would pay in interest, it’s in our best interest, mathematically, to pay the debt down this way. Again, we focus solely on the larger rate, and pay the minimums on the other debts until we pay that first account. From there, we use the money that were were going to use to pay the first debt, to pay the second. And so on, and so forth until all of the debt have been paid. 

With our example, the debts would be organized as such:

  1. $900 (25% interest)
  2. $3,292 (21% interest)
  3. $500 (18% interest)
  4. $1,657 (14% interest)
  5. $2,950 (12% interest)

Final Thoughts

Whichever method you chose, if you are serious about paying off your debts, it really doesn’t matter too much. What’s more important is that you actually do have a plan, and aren’t just stuck paying only the minimums. At that rate, it’ll take you years to pay things back, even if you don’t make another charge.

Technically, the avalanche method is the best method because it maximizes the amount of money you’d save by paying your debts backs. That being said, in my own person debt payback, I actually used a combination of the two. At first, I used the snowball because my smallest debts were very small, and they also had a pretty decent interest rate. Once those smaller debts were paid off, it made sense to switch to the avalanche method for the remainder of the payback. 

Do you, or have you had debt? How have you gone about paying it back? Let us know down in the comments below. 

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