Which is the Best Debt Repayment Strategy (Avalanche vs. Snowball)?

byThabo Maseko •March 21, 2025

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The Struggle with Debt & Finding the Best Repayment Strategy - A Complete Guide to Paying Off Debt Faster

Debt can feel like a heavy weight hanging over you, especially when it seems like the bills never stop coming. Whether it’s student loans, credit card debt, or personal loans, the stress of owing money can be overwhelming. But here's the good news: there are strategies you can use to pay off that debt more efficiently. The key is finding the right debt repayment strategy for you.

Two of the most popular strategies are the Avalanche method and the Snowball method. You’ve probably heard of them before, but what’s the difference? And more importantly, which one will work best for your unique situation?

In this blog post, we’re going to dive deep into both the Avalanche and Snowball methods. We’ll explain how each one works, weigh the pros and cons, and help you decide which strategy is the best debt repayment plan for you. By the end of this guide, you’ll have a clear idea of which method will save you the most money, help you get out of debt faster, and ultimately give you the peace of mind you deserve.

Let’s break down the basics and find out which debt repayment strategy is right for you.

What is the Avalanche Debt Repayment Strategy?

How the Avalanche Method Works:

The Avalanche method is all about saving you money on interest. The idea is simple: you start by paying off your highest-interest debt first, then move on to the next highest, and so on.

So let's imagine you have three debts: a credit card with a 20% interest rate, a student loan with a 5% interest rate, and a personal loan with a 10% interest rate. Under the Avalanche method, you would focus all your extra money on paying off the credit card debt first because it has the highest interest rate. Meanwhile, you would continue to make the minimum payments on your student loan and personal loan.

Once the credit card debt is gone, you move on to the personal loan (since it has the next highest interest rate), and finally, tackle the student loan last.

Advantages of the Avalanche Method

Save on Interest: By paying off high-interest debt first, you minimize the amount of interest you pay in the long run. Over time, this can save you hundreds or even thousands of dollars.
Faster Repayment: Since you’re tackling the highest-interest debt first, the total amount of money you owe goes down faster. That’s because less interest is accumulating on the remaining balances.

Here’s a simple example:

Debt Type	Interest Rate	Balance	Minimum Payment	Extra Payment	Total Interest Saved
Credit Card	20%	$2,000	$50	$200	$400
Personal Loan	10%	$5,000	$100	$0	$150
Student Loan	5%	$10,000	$150	$0	$0

In this case, by focusing on the credit card first, the total interest saved would be around $400 over the life of the loan. This is the power of the Avalanche method—more money in your pocket.

Disadvantages of the Avalanche Method

It can feel slow: At the start, you may feel like you’re not making much progress because you're focusing on the high-interest debt, which usually has a larger balance. This can be discouraging for some people.
Requires discipline: The Avalanche method works best when you stick with it over time. If you’re the type of person who likes to see quick results, the slow start of this method might cause you to lose motivation.

Think of it like running a marathon instead of a sprint. The payoff is huge in the end, but it takes time and focus to get there.

Is the Avalanche Method Right for You?

If you’re someone who can stay motivated over time and you want to save the most money on interest, the Avalanche method might be a perfect choice for you. It’s especially helpful if you have high-interest credit card debt or other high-interest loans that are draining your finances.

Real-life Example:
Imagine Sarah, who has $10,000 in credit card debt at 20% interest and $5,000 in student loans at 5%. She chooses the Avalanche method and tackles her credit card debt first. After a year of dedicated payments, Sarah saves hundreds of dollars in interest and gets rid of her high-interest debt much faster. Now, she can move on to her student loans, saving even more money in the long run.

What is the Snowball Debt Repayment Strategy?

How the Snowball Method Works:

The Snowball method takes a different approach. Instead of focusing on high-interest debt first, the idea is to pay off the smallest debt first, regardless of the interest rate. Once the smallest debt is paid off, you move on to the next smallest debt, and so on.

Let’s say you have the same three debts, but this time we’ll focus on the amount of debt rather than the interest rate:

Debt Type	Interest Rate	Balance	Minimum Payment
Credit Card	20%	$2,000	$50
Personal Loan	10%	$5,000	$100
Student Loan	5%	$10,000	$150

Under the Snowball method, you would start by paying off the credit card debt first (the smallest balance). Once the credit card debt is cleared, you move on to the personal loan, and finally, you would tackle the student loan.

Advantages of the Snowball Method

Quick wins: By paying off smaller debts first, you get the satisfaction of knocking out debts quickly. This can be motivating and help you keep going, especially if you’re new to debt repayment.
Psychological boost: Clearing small debts can give you a sense of accomplishment and encourage you to keep going. For many people, the psychological rewards of the Snowball method are a key reason why they stick with it.

Here’s how it might play out for Sarah if she used the Snowball method:

Debt Type	Interest Rate	Balance	Minimum Payment	Extra Payment	Amount Paid Off
Credit Card	20%	$2,000	$50	$200	$2,000 (Paid Off)
Personal Loan	10%	$5,000	$100	$200	$5,000 (Paid Off)
Student Loan	5%	$10,000	$150	$150	$10,000 (Paid Off)

By paying off the credit card first, Sarah experiences a quick win. This success keeps her motivated, and soon she clears her personal loan. With each debt paid off, she feels like she’s making real progress, and that keeps her going.

Disadvantages of the Snowball Method

More interest paid: Since the method prioritizes smaller debts over high-interest ones, you may end up paying more interest in the long run. This happens because high-interest debts, like credit cards, are left to grow while you focus on smaller loans.
Longer repayment time: Because you’re not focusing on high-interest debts, it might take longer to pay off your overall debt. In the end, this strategy could cost you more money than the Avalanche method.

Let’s look at how much extra you might pay with the Snowball method:

Debt Type	Interest Rate	Balance	Minimum Payment	Total Interest Paid (Over 2 years)
Credit Card	20%	$2,000	$50	$400
Personal Loan	10%	$5,000	$100	$800
Student Loan	5%	$10,000	$150	$0

Even though Sarah would pay off the smallest debts first, she would end up paying more interest on the personal loan and student loan, as these would accumulate interest while she focuses on clearing the smaller debts.

Is the Snowball Method Right for You?

If you find it hard to stay motivated and need quick wins to keep moving forward, the Snowball method might be a better fit for you. It’s particularly effective if you have smaller balances across various types of debt and need to see fast results to stay motivated.

Real-life Example:
Sarah, feeling discouraged by her large debts, chooses the Snowball method. By paying off the credit card first, she experiences a quick win. That success gives her the momentum to tackle the personal loan and then her student loan. Although she ends up paying a little more in interest, the psychological rewards of clearing smaller debts kept her moving forward, and she’s now completely debt-free.

Avalanche vs. Snowball: Which One is Right for You?

How to Decide Between the Avalanche and Snowball Methods:

Choosing between the Avalanche & Snowball methods depends on several factors. Let’s break it down:

Your Goal: Fast Debt Freedom or Motivation?

If your goal is to pay off debt as quickly and efficiently as possible, the Avalanche method is likely the better option. It will save you money on interest and help you pay off your debt faster.
If you need quick wins to stay motivated, then the Snowball method might be more up your alley. Paying off smaller debts first gives you the confidence to continue.

Your Personality: Are You Disciplined or Motivated by Small Wins?

Avalanche is best for disciplined individuals who can stick with a long-term plan, even when the results aren’t immediately visible.
Snowball works for people who need to see results quickly and get excited by clearing debts, no matter how small they are.

What’s Your Debt Look Like?

If you have high-interest credit card debt, the Avalanche method will save you more money in the long run.
If you have smaller balances and a variety of debt, the Snowball method may work better for you.

What Happens if You Combine Both Methods?

Sometimes, you don’t have to choose one or the other. Some people find that combining elements of both methods can be a good fit. For example, you might prioritize paying off your highest-interest debt first, but also focus on paying off one or two smaller debts to keep you motivated along the way.

This hybrid approach can give you the best of both worlds: the financial savings of the Avalanche method with the psychological rewards of the Snowball method.

Other Debt Repayment Strategies - Exploring Your Options

While the Avalanche and Snowball methods are two of the most well-known strategies, they are not the only options available. Depending on your personal situation, there are other methods you can use to pay off debt more efficiently. Let’s take a look at a few alternatives that might be worth considering.

Debt Consolidation

Debt consolidation is the process of combining multiple debts into one single loan with a potentially lower interest rate. This could be through a consolidation loan or a balance transfer credit card.

For example, if you have multiple credit cards with high interest rates, you could consolidate all that debt into a single loan with a lower interest rate. This can make managing your debt easier and can also help save you money on interest.

Pros of Debt Consolidation:

Simplifies payments: Instead of juggling multiple payments, you only have to worry about one loan.
Lower interest rate: If you qualify for a lower interest rate, you’ll save money on interest over time.
Better credit score: By paying off multiple debts and consolidating them into one, you may improve your credit score.

Cons of Debt Consolidation:

It’s not a magic fix: Consolidating debt doesn’t make it disappear. You still need to make regular payments.
Fees: Some consolidation loans or balance transfer credit cards come with fees or high interest rates if you miss a payment.

Debt consolidation can be a good option for those who want to simplify their payments, reduce their interest rates, and have the discipline to pay off the loan. But like any strategy, it requires careful planning and the ability to manage your finances effectively.

Debt Settlement

Debt settlement involves negotiating with creditors to reduce the total amount of debt owed. This can be a tempting option if you’re struggling with unmanageable debt, but it’s important to understand the risks.

Pros of Debt Settlement:

Reduce the total debt: You may be able to settle your debt for less than the full amount owed.
Faster resolution: If your debt is overwhelming, settling could allow you to pay it off quicker than traditional repayment methods.

Cons of Debt Settlement:

Impact on credit: Settling debt for less than owed can damage your credit score.
Debt settlement fees: Many debt settlement companies charge high fees for their services, and there’s no guarantee that creditors will accept the settlement offer.
Tax consequences: The amount of debt forgiven may be considered taxable income.

Debt settlement can be an option for those who have fallen behind on payments and are looking for a way to reduce the amount owed. However, it’s essential to consider the long-term effects on your credit and financial future.

The Debt Management Plan (DMP)

A Debt Management Plan is a structured repayment plan set up through a credit counseling agency. The agency will work with your creditors to create a single monthly payment plan that combines all your debts. This could include a reduced interest rate or a longer repayment period, depending on your situation.

Pros of a DMP:

Single monthly payment: You only need to make one payment each month, which simplifies the process.
Reduced interest rates: Credit counselors may negotiate lower rates on your behalf.
Professional guidance: Working with a counselor can help you get your finances back on track.

Cons of a DMP:

Requires commitment: You must stick to the plan for several years, and it may take longer to pay off your debt than other methods.
Potential fees: Credit counseling agencies may charge fees for setting up and managing your plan.

A Debt Management Plan can be helpful if you’re overwhelmed by your debt and need professional help in negotiating better terms. It’s a great option for those who need structure and guidance in managing their finances.

Common Mistakes to Avoid When Repaying Debt

No matter which debt repayment strategy you choose, there are common mistakes that can derail your progress. Let’s look at some of the most frequent pitfalls to avoid when paying off debt.

Mistake #1: Ignoring Your Budget

Without a solid budget, it’s easy to get off track with your debt repayment. If you don’t track your income and expenses, you might end up spending money that could have gone toward your debt.

Tip: Use a budgeting tool or app to help you stick to a monthly budget. Set aside money for debt repayment first before spending on non-essential items.

Mistake #2: Making Only Minimum Payments

While making the minimum payments on your debts will keep creditors from calling, it’s not enough to make a significant dent in your debt. Minimum payments often barely cover the interest, leaving your principal balance the same.

Tip: Always try to pay more than the minimum payment, even if it’s just a small amount extra each month. Every little bit counts!

Mistake #3: Taking on More Debt

It’s tempting to use credit cards or take out loans to cover unexpected expenses, but doing so can undo all of your hard work. If you’re actively working on paying down debt, adding more will only increase your burden.

Tip: Avoid using credit cards while paying off debt. Consider using a cash envelope system to control your spending and avoid accumulating more debt.

Mistake #4: Giving Up Too Soon

Debt repayment is a marathon, not a sprint. Many people give up when they don’t see results immediately, especially if they’re using the Avalanche method and not seeing quick wins. The key is consistency.

Tip: Celebrate small victories along the way, like paying off your first debt or making your largest payment yet. Keep your eye on the bigger picture and stay committed to your plan.

Conclusion - Which Debt Repayment Strategy Should You Choose?

When it comes to paying off debt, choosing the right strategy is crucial to your success. The Avalanche method will save you the most money on interest and help you get out of debt faster, but it requires patience and discipline. The Snowball method, on the other hand, offers quick wins and psychological motivation but may cost you more in the long run.

Ultimately, the best strategy for you depends on your personality, financial goals, and debt situation. If you need help getting started, don’t hesitate to seek professional advice or credit counseling to ensure you choose the right path for your debt repayment journey.

Remember, no matter which method you choose, the most important thing is to take action. Every step you take toward paying off debt is one step closer to financial freedom.

So, what are you waiting for? Start your debt repayment journey today and take control of your financial future.