Both methods pay the minimum on every debt and put every extra dollar on one target. The only difference is which debt is the target. A small example makes the trade-off clear.
The debts
- Store card: $900 at 26% APR, minimum $35
- Credit card: $4,200 at 22% APR, minimum $110
- Car loan: $7,500 at 7% APR, minimum $230
Say there's $575 a month in total for debt: $375 in minimums plus $200 extra.
Snowball: smallest balance first
The extra $200 goes to the $900 store card, so it's gone in about four months. Its $35 minimum then rolls onto the credit card, and so on. You see a debt disappear early, which is the whole point of the method.
Avalanche: highest rate first
Here the store card is also the highest rate (26%), so both methods start the same way. They split after that only if a smaller balance has a lower rate than a bigger one. In this example the order ends up identical: store card, credit card, car loan.
When they differ
Swap the rates: make the $900 card 12% and the $4,200 card 26%. Now the avalanche pays the $4,200 card first and saves interest, while the snowball still clears the $900 card first for the quick win. The gap in total interest is usually modest on small balances and grows with bigger, high-rate debts.
How to choose
- If you've started and stopped debt plans before, the snowball's early wins are worth a little extra interest.
- If you'll stick with it either way, the avalanche costs less.
- Whichever you pick, the biggest lever is the extra amount each month, not the order.
Free tools
- Debt snowball vs avalanche calculator to compare both with your own numbers
- Debt payoff spreadsheet (free CSV for Excel / Google Sheets)
- Snowball vs avalanche, the longer guide
- 42 free budget templates (pay what you want, $0 is fine)
General information, not personal financial advice.
— Smart Budget Sheets