Debt snowball vs avalanche: which payoff order fits?
Compare the smallest-balance and highest-interest-rate methods, plan an extra payment and understand how fees and minimums affect the timeline.
Keep every minimum payment current
List each balance, annual rate, minimum and due date. Both strategies pay the minimum on every account, then direct the same available extra amount to one priority debt. The snowball targets the smallest balance first; the avalanche targets the highest interest rate first. The CFPB describes both approaches.
A simple two-debt example
Suppose you owe 1,000 at 20% and 4,000 at 8%. Both strategies start with the 1,000 debt, so they agree here. If instead the 1,000 balance carries 8% and the 4,000 balance 20%, snowball starts with 1,000 while avalanche starts with 4,000. At the same payment level, targeting the higher rate generally reduces interest, but exact savings depend on minimums, compounding and fees.
Make a plan you can maintain
When one balance is cleared, roll its former payment into the next target while continuing all other minimums. Compare scenarios with the debt payoff calculator and check your monthly cash available in the budget calculator. The irregular-expenses guide helps prevent a surprise bill from disrupting the plan. Check prepayment terms and avoid new borrowing in the comparison.