Paying off debt can feel overwhelming. Whether you have credit card balances, personal loans, or other liabilities, a clear plan is essential to get out of debt and regain control of your finances. Two of the most popular methods for repaying debts are the “debt snowball” and the “debt avalanche” strategies. Each has its benefits and drawbacks, and the best choice depends on your personality and financial goals.
What Is the Debt Snowball Method?
The debt snowball method focuses on paying off your smallest debts first. Here’s how it works:
- List all your debts from the smallest balance to the largest, regardless of interest rate.
- Pay the minimum due on all debts except the smallest one.
- Put all extra money you can towards the smallest balance until it’s paid off.
- Once a debt is cleared, direct your freed-up money to the next smallest balance — causing your repayment momentum to grow, “snowballing” as you go.
Pros of Debt Snowball
- Psychological wins: Clearing small debts quickly can boost motivation and confidence.
- Simplicity: Easy to follow and track progress.
- Increases momentum: Each paid-off debt creates a sense of accomplishment, fueling your desire to keep going.
Cons of Debt Snowball
- Potentially higher interest costs: You might pay more interest over time if your larger debts have high rates but are paid later.
What Is the Debt Avalanche Method?
The debt avalanche method prioritizes debts with the highest interest rates:
- List all your debts in order of interest rate, from highest to lowest.
- Pay the minimum due on all debts, but put any extra funds toward the debt with the highest interest rate first.
- Once the highest-rate debt is gone, roll payments onto the next highest, creating an “avalanche” effect toward debt freedom.
Pros of Debt Avalanche
- Save money on interest: This method reduces the total amount you’ll pay in interest.
- Faster total payoff: You could become debt-free sooner since high-interest debts are tackled first.
Cons of Debt Avalanche
- Fewer early “wins”: Large high-interest debts may take a long time to pay off, which can be discouraging.
Debt Snowball vs. Debt Avalanche: Head-to-Head Comparison
| Feature | Debt Snowball | Debt Avalanche |
|---|---|---|
| Order of Payoff | Smallest balance first | Highest interest rate first |
| Psychological Motivation | High (quick wins) | Lower (wins may come later) |
| Total Interest Paid | Generally more | Generally less |
| Complexity | Very simple | Needs more tracking, can be complex |
| Best For | People who are motivated by quick progress | People who want to optimize for lowest interest |
Applying These Methods in Real Life
Deciding between the debt snowball and debt avalanche methods comes down to your personality and what keeps you motivated. If seeing quick progress matters most, you might do better with the snowball method. But if your main goal is to minimize how much interest you pay overall, the avalanche method is logically the best choice.
Tools like the Find My Card page on FinWitty can also help by connecting you to zero annual fee cards or consolidation options that suit your needs while you work your way out of debt.
Tips for Sticking to Your Debt Repayment Plan
- Automate your payments: Set up automatic monthly payments to avoid missing deadlines.
- Track your progress regularly: Celebrate every debt you clear — no matter how small!
- Avoid taking on more debt: Put purchases on hold and resist applying for new credit cards unless they help with consolidation at 0% introductory APRs.
- Look for ways to save money: Use FinWitty’s blog to discover effective money-saving strategies and the best credit card offers.
Example: How Debt Snowball and Debt Avalanche Change Your Results
Imagine you have these three debts:
- Rs 10,000 at 18% (Credit Card 1)
- Rs 45,000 at 14% (Loan)
- Rs 25,000 at 25% (Credit Card 2)
Here’s what happens under each approach:
- Debt Snowball: You pay off the Rs 10,000 first, then Rs 25,000, and finally the Rs 45,000 loan, regardless of their interest rates.
- Debt Avalanche: You pay off Rs 25,000 (the highest interest), followed by Rs 10,000, then the Rs 45,000 loan. You save more on interest this way.
Should You Combine the Approaches?
While the methods are usually discussed separately, some people use a hybrid. For example, you might start with a few small balances for an early confidence boost, then switch to attacking high-interest debts. The most important thing is to have a plan — and stick to it.
Smart Use of Credit Cards During Repayment
If you’re working to pay off credit cards, try not to use them for new purchases unless you have a specific goal, like earning rewards and paying in full every month. Consider switching to a zero annual fee card to reduce costs, or using a lifetime free card that offers better reward points for necessary expenses. Remember to check FinWitty’s latest credit card offers if you need to replace a high-fee card as part of your debt reduction plan.
FAQs
Which debt repayment method saves more money?
The debt avalanche method generally saves you more in interest because you eliminate high-interest debts first. If your goal is to pay less overall, avalanche is the better mathematical choice.
I struggle with motivation. Is the debt snowball still worth considering?
Absolutely. Many people need the quick wins the snowball offers to stick with debt repayment long-term. If motivation is a struggle, snowball can help you stay on track, even if it costs a bit more in interest.
Can I use a balance transfer credit card to help pay off debt?
Yes, a balance transfer to a 0% APR card can buy you time to repay debt interest-free. Just be aware of any transfer fees and make sure you don’t run up new balances. Compare credit cards at FinWitty’s Find My Card page to find the best deals.
Is it okay to close paid-off credit cards?
Not always. Closing old cards can reduce your credit score by shortening your credit history and lowering your available credit limit. Consider leaving old cards open, especially those with zero annual fees.
Should I stop investing while paying off debt?
This depends on your interest rates and financial situation. If your debt has extremely high interest rates, focus on repayment first. However, continuing smaller investments (like an emergency fund) can be wise for overall financial health.
Conclusion
There’s no single “right” way to tackle debt — the best method is the one you’ll stick with until you’re free from it. Whether you favor the motivation of the debt snowball or the efficiency of the debt avalanche, the key is to make your plan and not give up. For more guides on compare credit cards, credit card benefits, and money-smart strategies, head to the FinWitty blog.
If you’re ready to find smarter credit cards and more ways to save, check Find My Card on FinWitty.com for options tailored to your financial journey.