Debt snowball and debt avalanche are ways to choose where extra repayment money goes. Snowball starts with the smallest balance. Avalanche starts with the highest interest rate. The CFPB describes these as the snowball method and the highest-interest-rate method. CFPB repayment overview
Both approaches depend on a budget that covers required payments and leaves money to direct toward a target debt. This comparison focuses on repayment order, potential interest costs, and motivation. It does not assume particular balances, rates, or payoff dates.
Compare the methods on the same basis
| Question | Debt snowball | Debt avalanche |
|---|---|---|
| Which debt receives extra money? | Smallest remaining balance | Debt with the highest interest rate |
| What is the main appeal? | Clearing an account can show visible progress | Addressing the costliest rate can reduce interest expense |
| What is the tradeoff? | A costly larger debt may wait | A large target debt may take longer to eliminate visibly |
| What happens after payoff? | Redirect the freed payment to the next smallest debt | Redirect it to the next highest-rate debt |
| What happens to other debts? | Continue required payments | Continue required payments |
The CFPB's debt-reduction worksheet describes the cost and motivation tradeoffs. The methods organize extra payments; they do not replace the repayment requirements on other accounts.
How the snowball method works
List the debts by remaining balance, starting with the smallest. Continue the minimum payments on the other debts and send available extra money to the smallest balance.
After that debt is paid off, redirect the money previously used for its payment toward the next smallest debt. The approach builds a larger payment toward the remaining target as accounts are cleared.
The attraction is visible completion. Eliminating an account can make progress easier to recognize and reduce the list of payments to track. The tradeoff is that the smallest balance may have a lower rate than a debt left waiting. The CFPB notes that snowball does not necessarily eliminate the most costly debt first.
