If you are juggling several debts, the order you pay them off matters. Two popular strategies — the snowball and the avalanche — both work, but they optimize for different things: motivation versus math.
The debt avalanche (lowest cost)
With the avalanche, you make minimum payments on everything, then throw every extra dollar at the debt with the highest interest rate. Once it is gone, you roll that money into the next-highest rate, and so on. Because you are always attacking the most expensive debt first, the avalanche minimizes the total interest you pay and usually clears your debt fastest overall.
The debt snowball (most motivating)
With the snowball, you ignore interest rates and attack the smallest balance first, regardless of rate. You knock out small debts quickly, and each payoff delivers a psychological win that keeps you going. You may pay slightly more interest than the avalanche, but the momentum helps many people actually finish.
Which saves more?
The avalanche always saves at least as much money, and often noticeably more when your highest-rate debt is also large. But the best method is the one you will stick with. If you have abandoned debt-payoff plans before, the quick wins of the snowball may be worth a little extra interest.
A worked example
Say you have a $1,000 store card at 24%, a $3,000 credit card at 19%, and a $6,000 personal loan at 11%. The avalanche targets the 24% card first (most expensive), then 19%, then 11%. The snowball targets the $1,000 balance first (smallest), then $3,000, then $6,000. Here the smallest balance also has the highest rate, so the two methods nearly agree — which is common.
See your payoff date and interest
For any single balance, our debt payoff calculator shows exactly how long it takes to clear and how much interest you will pay at a given monthly payment — and warns you if the payment is too low to make progress. Once your high-interest debt is under control, you can shift focus to goals like paying off your mortgage faster or saving for retirement.