The avalanche method pays down the highest-rate debt first; it minimizes total interest paid. The snowball method pays down the smallest-balance debt first; it produces psychological wins that support persistence. For most households in real conditions, snowball wins on completion rate, avalanche wins on total cost, and the right choice depends on the household.
- 01State each method precisely.
- 02Compute the total cost of each on a real debt schedule.
- 03Choose defensibly for a specific household.
Avalanche
List every debt by interest rate, highest first. Pay the minimum on all. Direct every extra dollar to the highest-rate debt until it is paid. Move to the next-highest. Continue until all debts are cleared. Mathematically optimal.
Snowball
List every debt by balance, smallest first. Pay the minimum on all. Direct every extra dollar to the smallest debt until it is paid. Move to the next-smallest. The wins arrive faster, and households who need momentum stick with the plan.
The honest recommendation
Households with strong discipline and multiple high-rate debts will save materially with avalanche. Households whose past attempts have failed should use snowball; the psychological wins keep the plan alive, and a completed snowball beats an abandoned avalanche every time.
- Avalanche is optimal; snowball is durable.
- A completed plan beats an abandoned plan.
- Choose for the household's psychology, not the spreadsheet.