Snowball vs avalanche — which payoff method?
Behavioural vs mathematical approaches to clearing multiple debts, with when each wins.
Published
When you have several debts, two popular strategies decide where extra money goes after minimum payments:
- Snowball — clear the smallest balance first. Wins on motivation: you see accounts close sooner.
- Avalanche — clear the highest interest rate first. Usually wins on total interest paid.
Which should you pick?
If the interest gap between debts is large, avalanche often saves meaningful money. If the rates are similar, snowball’s psychological wins may matter more. Run both strategies with your balances, rates and extra payment — then choose the plan you will stick to.
Consolidation is a third path: one new loan instead of several. It can help if the new rate is genuinely lower after fees — use the consolidation break-even tool before you apply.
Related
Calculators and articles on LoanCalc Lab are illustrative and not personalised financial advice or a credit offer. Always check the lender’s disclosure for your country before you borrow.