Written by Kevin Payne 

Taking on debt can provide the necessary funding for financial needs. People often use credit cards, loans, and other financing options to cover purchases, fund projects, or pay for school. 

The debt snowball and the debt avalanche are two popular methods for paying off debt. Both methods have their advantages and disadvantages. The better option often depends on your situation and which option you're more likely to stick with to pay off debt. Here's a look at both repayment strategies, how they work, and how they can help you pay off your debt.

What Is The Debt Snowball Method? 

The debt snowball method is a debt payoff strategy that targets paying off debt bills, one at a time, from smallest to largest.

Staying on course is challenging when pursuing long-term goals, such as paying off debt. Quick financial wins can keep you stay motivated and push you to continue toward the finish line. That's what the debt snowball method is all about. 

How does it work?

The debt snowball focuses on tackling your smallest debts first. Start by making a list of all of your debt bills, sorting them by total balance from the smallest amount to the largest. 

Put any available funds towards paying off your smallest bill while making minimum monthly payments on all other debts. Once you've paid it off, move on to the next smallest balance, rolling over extra funds you budgeted with the bill's minimum monthly payment. Continue to roll over minimum payments with the extra funds to create a snowball effect as you continue to pay off each bill. 

Debt snowball pros

  • Motivating to eliminate debt bills more frequently
  • More money to put towards repayment as you pay off each bill

Debt snowball cons

  • Longer repayment period
  • You'll pay more interest over time

What Is The Debt Avalanche Method? 

The debt avalanche method is another repayment strategy aimed at eliminating debt. Instead of focusing on the smallest balances, the debt avalanche focuses on reducing the amount of interest you pay by tackling bills with the highest interest rates first. 

How does it work?

Similar to the debt snowball method, list out all of your debts, but sort them by their interest rates. Start applying any available funds to the bill with the highest interest rate, while making minimum monthly payments on all other bills. Once you've paid off a bill, roll over those funds with the minimum payment on the bill with the next highest rate until you've paif off all debt. 

Debt avalanche pros

  • You'll pay less interest overall 
  • Shorter repayment period

Debt avalanche cons

  • Harder to stay motivated
  • It takes longer to see progress

Which Method Is Better For Paying Off Debt? 

The best debt payoff strategy is the one that helps you reach your goal. Everyone is different and what works for one person may not work for another. Consider your ability to remain disciplined with a monthly budget and what kind of motivation you need to stay on course. If seeing bills disappear more often provides a psychological boost, the debt snowball might be your best option. If you can stay disciplined, tackling high interest debt with the debt avalanche will help you pay less interest overall.