Debt snowball vs avalanche: which is better?

Q: How much does the avalanche save?

It depends on the rate gap and the extra payment. A $3,000 loan at 9% and an $8,000 card at 24% with $150 extra: $739. With closer rates it can be a few hundred dollars or nothing.

Q: When are snowball and avalanche the same?

When the smallest balance has the highest rate, both choose the same order and cost the same. They also match when nothing is paid beyond the minimums, until the first debt clears.

Q: Does it matter which method I pick?

That is your call. The arithmetic can tell you the price of the difference for your own debts, which is often smaller than the argument suggests.

On interest alone the avalanche almost always wins. The useful question is by how much, and that depends on your debts.

6 minute read

Debt snowball vs avalanche: which is better? On interest alone, the avalanche almost always costs less, and the reason is simple enough to fit in a sentence. The interesting part is the size of the gap, which ranges from nothing to real money depending on your debts. Put yours into the snowball vs avalanche calculator and you will see both orders run side by side.

The two methods, and what they share

Both methods pay every minimum, every month. Both put one fixed extra amount on top. And both roll a cleared debt's minimum payment onto the next one, so the total you pay each month never changes. The only difference is which debt gets the extra first.

Snowball: the smallest balance first.
Avalanche: the highest interest rate first.

When your smallest debt also has the highest rate, the two are the same plan and cost the same. The question only matters when they disagree.

Why the avalanche usually wins the arithmetic

Each month, a dollar of extra payment stops being charged interest at the rate of whichever debt it lands on. Put it on a 24% card and it saves 24% a year; put it on a 9% loan and it saves 9%. The avalanche aims every spare dollar at the highest rate, so it removes the most interest per dollar, month after month.

A worked example

Two debts, $150 a month extra on top of the minimums:

A car loan: $3,000 at 9%, $90 minimum.
A credit card: $8,000 at 24%, $180 minimum.

The snowball attacks the car loan because it is smaller. The avalanche attacks the card because its rate is higher.

Snowball: car loan gone in 14 months; everything clear in 37 months, with $4,252 of interest.
Avalanche: card gone in 34 months; everything clear in 35 months, with $3,513 of interest.

The avalanche saves $739 and two months. The snowball gets its first debt off the list 20 months sooner. That is the whole trade in one example: money on one side, an early finish line on the other.

Debt snowball vs avalanche: how big is the gap for you?

The gap is not fixed. Running the same two debts with different inputs shows what drives it.

The rates are close. Make the car loan 21% instead of 9% and the gap falls from $739 to $214. Make it 27% and both methods pick the car loan first, so the gap is $0.
No extra payment at all. With only minimums, both finish in 75 months with $9,110 of interest. There is no spare money to aim, so the order changes nothing until a debt clears by itself.
A large extra payment. At $300 extra the gap is $574; at $600 it is $374; at $1,000 it is $250. The faster everything clears, the less time the order has to matter.
A small extra payment. At $50 extra the gap is $594, but it takes 54 to 56 months to get there.

Adding a third debt — a $1,200 store card at 18%, $40 minimum — gives a gap of $686. The snowball clears the store card in 7 months; the avalanche clears everything a month sooner.

Does the avalanche always win?

Almost, but not quite. We ran 20,000 random sets of three debts through the same engine the calculator uses, with balances from $500 to $15,500, rates from 3% to 30%, and between $0 and $400 a month extra.

The avalanche cost less in most of them.
They tied in 3,830, usually because both methods chose the same order.
The snowball cost less in 136, under 1%, and never by more than $90.

The cases we inspected where the snowball won all had rates within a point or two of each other, or almost no extra payment. Clearing a small debt sooner frees its minimum payment sooner, and when the rates are nearly equal that can outweigh the rate difference. So the honest statement is: the avalanche wins or ties on interest in nearly every case, and where it loses, it loses by very little.

What the arithmetic cannot settle

Both methods only work if the extra payment keeps going in every month. Whether an early cleared debt helps someone keep going is a question about behaviour, not arithmetic, and this site does not try to answer it. What the calculator can do is put a price on the choice: if the gap for your debts is $30, the order barely matters; if it is $3,000, you know what the quicker first win costs.

For a single debt, the debt payoff calculator shows how long it takes and what paying extra saves. If one of your debts is a credit card on minimum payments only, the minimum payment calculator shows why that route takes so long.

Common questions

Which is faster, debt snowball or avalanche?

Usually the avalanche, by a month or two, because less of each payment goes to interest. In the worked example it finishes in 35 months against 37. The snowball clears its first debt sooner, though: 14 months against 34.

How much does the avalanche save?

It depends on the gap between the rates and how much extra you pay. On a $3,000 loan at 9% and an $8,000 card at 24% with $150 extra, it saves $739. With the rates closer together it can be a few hundred dollars, or nothing.

When are snowball and avalanche the same?

When the smallest balance also has the highest rate, both methods choose the same order and cost exactly the same. They also match when there is no extra payment beyond the minimums, until the first debt clears.

Can the snowball ever cost less interest?

Occasionally. In 20,000 random sets of three debts it cost less in 136, by at most $90. The ones we inspected had rates very close together or almost no extra payment.

Does it matter which method I pick?

That is your call, not the arithmetic's. What the arithmetic can tell you is the price of the difference for your own debts, which is often smaller than the argument about it suggests.

Not financial advice. Worked examples assume fixed interest rates charged monthly at the annual rate divided by twelve, fixed minimum payments, no fees and no new borrowing. The debts are illustrations, not quotes.