If you have several debts, the order you pay them off matters. Two strategies dominate: the debt avalanche and the debt snowball. Both start the same way — pay the minimum on everything, then throw every spare dollar at one target debt — but they pick that target differently.
How the two methods work
Debt avalanche: highest interest rate first
List your debts from highest APR to lowest. Put all extra money toward the highest-rate debt. When it's gone, roll that payment into the next-highest rate. Because you eliminate the most expensive debt first, this method always costs the least interest.
Debt snowball: smallest balance first
List your debts from smallest balance to largest, regardless of rate. Clear the smallest one first, then roll its payment into the next. You pay a little more interest, but you get quick wins that can keep you motivated.
A worked example
Imagine three debts and a total budget of $700 a month for debt repayment:
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Store card | $1,200 | 15.9% | $35 |
| Credit card | $6,000 | 24.9% | $150 |
| Car loan | $9,000 | 6.9% | $260 |
| Avalanche | Snowball | |
|---|---|---|
| First debt cleared | Month 18 (credit card) | Month 5 (store card) |
| Debt-free | Month 27 | Month 27 |
| Total interest | ≈ $2,400 | ≈ $2,560 |
The avalanche saves about $155 here. The snowball delivers its first win more than a year earlier. Both are debt-free in the same month, because the same $700 goes to debt every month either way.
Which one should you choose?
- Choose the avalanche if you are disciplined and motivated by saving the most money, or if your high-rate debt is also large.
- Choose the snowball if you've struggled to stick with a plan before. Research on consumer behaviour suggests early wins help many people keep going.
- Hybrid: knock out one or two tiny balances for momentum, then switch to avalanche order.
The best method is the one you will actually finish.
Speed up either method
- Ask card issuers for a lower APR — a one-minute call can cut your rate.
- Consider a 0% balance transfer or a lower-rate consolidation loan (watch for fees).
- Put windfalls such as tax refunds straight onto the target debt.
- Keep a small emergency fund so new expenses don't go back on a card — our savings goal calculator can help you plan one.
See exactly how long one card will take to clear with the calculator below.