Paying Down Debt Faster: Snowball vs. Avalanche

1/8/2026

Pay Down Debt

A new year often brings renewed motivation to improve your finances, and paying down debt is one of the most impactful goals you can set. Whether you’re tackling credit cards, personal loans, or auto debt, having a clear strategy can help you pay off balances faster and save money over time.

Two of the most popular and proven debt repayment methods are the snowball method and the avalanche method. While both approaches focus on consistency and momentum, they work in different ways. Understanding how each method works can help you choose the strategy that best fits your financial and personal goals.

The Snowball Method: Build Momentum First

The snowball method focuses on paying off your smallest balances first, regardless of interest rate. The goal is to create quick wins that keep you motivated.

How It Works

List all of your debts from smallest balance to largest.
Make minimum payments on all debts.
Put any extra money toward the smallest balance.
Once the smallest debt is paid off, roll that payment into the next smallest debt.

Example

If you have:

Credit Card A: $500 balance
Credit Card B: $2,000 balance
Auto Loan: $10,000 balance

You would focus extra payments on Credit Card A first. Once it’s paid off, you apply that payment to Credit Card B, creating a growing “snowball” effect.

Pros

Quick wins boost motivation
Simple and easy to follow
Great for staying consistent

Cons

May result in paying more interest overall
Does not prioritize high-interest debt

The Avalanche Method: Save More on Interest

The avalanche method targets debts with the highest interest rates first, helping you reduce the total interest you pay over time.

How It Works

List all debts from the highest interest rate to the lowest.
Make minimum payments on all debts.
Put extra money toward the debt with the highest interest rate.
Once that debt is paid off, move to the next highest rate.

Example

If you have:

Credit Card A: $3,000 at 22% APR
Credit Card B: $1,500 at 18% APR
Auto Loan: $10,000 at 6% APR

You would focus extra payments on Credit Card A first, even though it’s not the smallest balance.

Pros

Saves the most money on interest
Helps pay off debt faster overall
Ideal for high-interest credit card debt

Cons

Progress may feel slower at first
Requires more patience and discipline

Which Method Is Right for You?

The most effective debt repayment strategy is the one you can consistently follow. If motivation and quick progress keep you going, the snowball method may be a better fit. If your main goal is minimizing interest and saving money long-term, the avalanche method may be the smarter option.

Some people even use a hybrid approach, starting with the snowball method for early wins, then switching to the avalanche method once momentum is built.

Tips to Accelerate Your Debt Paydown

No matter which method you choose, these tips can help you reach your goal faster:

Make extra payments whenever possible
Apply bonuses, tax refunds, or side income to debt
Avoid taking on new debt while paying off balances
Review your budget regularly to free up extra cash

How a Credit Union Can Help

Credit unions often offer tools and resources to support your debt repayment journey, including:

Lower interest rate loans or balance transfer options
Personalized financial guidance
Budgeting tools and online account management

By choosing the right repayment strategy and staying consistent, you can make meaningful progress toward becoming debt-free this year.

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