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Snowball or Avalanche? Choosing the Best Debt Repayment Strategy

Happy family at sunset. Father, mother and two children daughters are having fun and playing on snowy winter walk in nature. The child sits on the shoulders of his father. Frost winter season.

Snowball or Avalanche? Choosing the Best Debt Repayment Strategy

There are two effective methods for tackling debt:

1. Snowball
Pay off the smallest balances first.

2. Avalanche
Pay off the highest interest balances first.

 

How It works

Snowball

  • Make minimum monthly payments on all debts
  • Put extra payments toward the smallest debt
  • Once paid off, make payments on the next smallest debt
  • Continue until debt-free

Avalanche

  • Make minimum monthly payments on all debts
  • Put extra payments toward the highest interest rate loan
  • Once paid off, make payments on the next highest interest rate loan
  • Continue until debt-free
Pros

Snowball

  • Satisfying to pay off debt quickly
  • Keeps you motivated

Avalanche

  • Saves more interest long-term
Cons

Snowball

  • Pay more in interest long-term

Avalanche

  • Longer wait to see the first debt paid off
  • Less motivating

 

Who It Works For

Snowball

  • People who are motivated by seeing results quickly

Avalanche

  • People who excel at meeting long-term goals without immediate results.

 

Start paying off your debt today. A financial professional can help you tackle your debt in alignment with your goals.