Both methods can help you pay down debt. The difference is which balance gets your extra payment first.
With either method, make the required minimum payment on every debt. Then put any extra amount you can afford toward one target. When that debt is paid off, roll its payment into the next one.
Debt snowball: smallest balance first
List your debts from the smallest balance to the largest, regardless of interest rate. Put extra money toward the smallest balance. Paying one off sooner can give you a visible win and help you keep going. The tradeoff is that a higher-rate balance may keep accruing interest while you focus elsewhere.
Debt avalanche: highest interest rate first
List debts by interest rate, highest to lowest. Put extra money toward the highest-rate debt. With the same payment budget and fixed rates, this generally lowers total interest compared with targeting smaller, lower-rate balances first. The tradeoff is that it may take longer to see the first balance disappear.
A quick example
- Debt A: $500 at 12% APR
- Debt B: $2,000 at 24% APR
- Debt C: $1,000 at 18% APR
Snowball order: A → C → B, because A has the smallest balance. Avalanche order: B → C → A, because B has the highest interest rate. If you have $100 extra this month, snowball sends it to A; avalanche sends it to B. In both cases, pay all three minimums first.
Which one should you choose?
Choose snowball if early payoffs would help you stay motivated. Choose avalanche if you want to prioritize reducing interest costs. The method you can follow consistently may be more useful than a plan you abandon after a month.
Before deciding, write down each balance, interest rate, minimum payment, and due date. Check whether any rate is promotional or variable; the order may change if a rate changes. Choose an extra payment that fits your actual budget.
If you cannot afford minimum payments, focus on that problem first. Contact your creditors about hardship options rather than planning extra payments you cannot make.
The Consumer Financial Protection Bureau explains both payoff methods and offers a debt-reduction worksheet.
Put the plan on paper
Your debt-payment amount needs room in your monthly budget. Our free planner helps you see your income and bills first, so you can pick an extra payment that is realistic.
If you prefer tracking bills in a physical notebook, you can view this bill tracker on Amazon. A notebook you already own works, too.
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Need a simple spending framework first? Read the 50/30/20 budget guide.