Debt Snowball vs. Avalanche: Which Payoff Method Wins?

Both methods do the same core thing: pay minimums on everything, then throw every spare dollar at one target balance. They differ only in which balance you target first.

The avalanche method

Order your debts by interest rate, highest first, regardless of balance. Every extra dollar goes to the top of that list until it's cleared, then rolls down to the next. Mathematically, this always costs the least in total interest.

The snowball method

Order your debts by balance, smallest first, regardless of rate. You clear individual accounts faster, which frees up minimum payments and — more importantly — produces visible progress early.

A worked comparison

Say you have a $1,200 store card at 26%, a $4,800 credit card at 21%, and a $9,000 car loan at 7%, with $400 a month above minimums.

• Avalanche: store card, then credit card, then car loan — the lowest total interest paid
• Snowball: store card, then credit card, then car loan — identical here, because the smallest balance also has the highest rate
• The methods only diverge when a large balance carries the highest rate

How to choose

1. 1Run both orders and compare total interest and payoff date
2. 2If the difference is small, choose snowball for the momentum
3. 3If the difference is large and you're motivated by numbers, choose avalanche
4. 4Either way, stop adding new balances to the accounts you're clearing

The part that actually decides it

Neither method works without a consistent extra payment. Finding that extra amount in your budget — and protecting it when the month gets tight — matters far more than the ordering strategy you pick.

Verdi's debt planner lets you model both orders side by side with your real balances and rates, so the choice is based on your numbers rather than a general rule.