Money 101 · Module 3 of 6: Debt · Lesson 3 of 4 · 4 min read
Avalanche vs snowball: two ways to pay off debt
With more than one debt, you pay the minimum on all of them and put every spare euro on one. The avalanche and snowball methods are two ways to choose which one.
The avalanche: highest rate first
List your debts by interest rate (APR) and put the extra on the most expensive one. When it is gone, add everything you were paying on it to the next most expensive.
Because the costliest balance shrinks first, this order pays the least interest overall. The catch is that the first debt can take a while to clear if it is large.
The snowball: smallest balance first
List your debts by balance and put the extra on the smallest one, whatever its rate. Each debt you clear frees up its payment for the next, so the amount rolls forward and grows.
You usually pay a little more interest than with the avalanche. In return you get quick wins, which can make it easier to keep going.
A worked example
Say you have €100 extra each month on top of the minimums, and the three debts below.
The avalanche puts the €100 on the credit card first, because 20% is the highest rate. That €1,200 balance costs about 1,200 × 0.20 ÷ 12 = €20 of interest a month, so every euro off it saves the most.
The snowball puts the €100 on the store card first, because €400 is the smallest balance. With a €20 minimum plus the €100, that is 400 ÷ 120 ≈ 3.3 months, so it is gone in about four months including interest. Its €120 then joins the payments on the next debt.
Credit card: €1,200 at 20%
Store card: €400 at 10%
Car loan: €3,000 at 7%
Which should you choose?
If you are confident you will stick with it, the avalanche saves money. If you have tried before and lost motivation, the snowball's early wins may be worth the extra interest. When the smallest debt also has the highest rate, both methods agree.
Either way, the plan you keep following beats the perfect one you give up on. The debt payoff calculator shows both orders side by side for your own debts, and the guide how to get out of debt covers the wider plan.
Whichever you pick, avoid adding new spending to the cards you are clearing, and keep a small cushion of savings so one surprise bill doesn't undo months of progress.
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Key takeaways
Pay every minimum, then put all spare money on one debt.
Avalanche: highest rate first – the least interest overall.
Snowball: smallest balance first – quicker wins, a bit more interest.
Try it
Opens the debt payoff calculator with €100 extra a month – add your debts to see the avalanche and snowball orders side by side.
4 questions. Pick an answer to see why it's right or wrong.
Which debt does the avalanche method pay off first?
Right. The avalanche targets the most expensive debt first.
Not quite. Neither method picks by largest balance.
Not quite. That is the snowball method.
Show the answer
The one with the highest interest rate – List your debts by interest rate (APR) and put the extra on the most expensive one.
In the example, which debt does the snowball target first?
Not quite. That is the avalanche's first target, because of its high rate.
Right. It has the smallest balance.
Not quite. It has the largest balance and the lowest rate, so neither method starts there.
Show the answer
Store card: €400 at 10% – The snowball puts the €100 on the store card first, because €400 is the smallest balance.
Why might you choose the snowball even though it usually costs more interest?
Not quite. The avalanche usually pays the least interest.
Right. Clearing a debt early can help you stick with the plan.
Not quite. Both methods pay every minimum.
Show the answer
Quick wins can make it easier to keep going – In return you get quick wins, which can make it easier to keep going.
When do the avalanche and snowball give the same order?
Not quite. Minimum payments don't decide the order in either method.
Not quite. They agree whenever the smallest debt is also the most expensive.
Right. Both methods then point at the same debt.
Show the answer
When the smallest debt also has the highest rate – When the smallest debt also has the highest rate, both methods agree.
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Education, not advice. I'm not a financial adviser and I don't know your situation. These tools show the maths behind common rules of thumb; check important decisions with a qualified professional. Full disclaimer.
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