Snowball vs Avalanche: Which Debt Repayment Method Works Best?

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TL;DR

  •  The debt snowball method focuses on paying off the smallest debts first to build momentum. 
  • The debt avalanche method prioritises debts with the highest interest rates to minimise long-term costs.
  • Snowball can help with motivation and consistency, while avalanche can help reduce the total interest you pay.
  • The best debt repayment method depends on your personality, financial situation, and goals.


You’ve got debt. But what’s the best way to actually pay it off?

Two of the recommended strategies are the debt snowball and the debt avalanche methods. Both aim to simplify repayments and help you make steady progress toward becoming debt-free.

But they approach the problem differently.

It’s not about whether one is objectively better than the other, it’s about which one you are more likely to stick with and use to pay down your debt.

After all, the best debt strategy in the universe won’t help if you don’t use it.

Let’s break down the Snowball and Avalanche Methods so you can decide what might work best for you.

What is the Debt Snowball Method?

The Debt Snowball Method focuses on paying off your smallest debt first, regardless of its interest rate.

Once the smallest balance is cleared, you roll that payment into the next smallest debt, like a snowball gathering momentum as it grows.

How the Debt Snowball works

  1. List all your debts from smallest balance to largest balance.
  2. Continue making minimum payments on every debt.
  3. Put any extra money toward the smallest debt first.
  4. Once that debt is paid off, roll the payment into the next debt.
  5. Repeat until all debts are cleared.

Example

Debt Balance Min. Payment
 BNPL Balance   $600   $30 
 Credit Card   $1200   $60 
 Personal Loan   $4000   $120 


With the Snowball Method you'd pay the $600 BNPL balance first, then the $1,200 credit card, then the $4,000 personal loan.

Each time you clear a debt, the amount you can put toward the next one increases.

Pros of the Snowball Method

  • Quick wins build motivation: Paying off a debt early can feel like real, tangible progress.
  • Simplifies multiple repayments over time: Fewer debts means fewer bills to manage.
  • Can improve payment consistency: The psychological boost can help people stick to their plan.

Cons of the Snowball Method

  • May cost more in interest: High-interest debts might sit around longer.
  • Not always the most cost-efficient strategy: You may end up paying more overall.

What is the Debt Avalanche Method?

The Debt Avalanche Method prioritises debts based on interest rate, not balance. This means you tackle the most expensive debt first, with the goal of reducing the total interest you pay over time.

How the Debt Avalanche works

  1. List all debts from highest interest rate to lowest.
  2. Continue making minimum payments on all debts.
  3. Put any extra money toward the highest interest debt.
  4. Once it’s paid off, move to the next highest interest debt.
Debt Balance Interest Rate
 Credit Card   $2500   19% 
 Personal Loan   $4000   10% 
 BNPL Balance   $1200   0% (fees possible) 


With the Avalanche Method you'd pay the credit card (19%) first, then the personal loan (10%), then the BNPL balance. 

Pros of the Avalanche Method

  • Reduces total interest paid: High-interest debts are cleared sooner.
  • Mathematically efficient: Often the fastest way to minimise debt cost.
  • Can shorten the overall repayment timeline: Especially if the high interest debt has a lower total.

Cons of the Avalanche Method

  • Progress may feel slower: Large debts may take longer to pay off.
  • Motivation can be harder to maintain: You might not see quick wins early.

Snowball vs Avalanche: The Key Differences

 Debt Method   Snowball   Avalanche 
 Priority   Smallest balance first   Highest interest rate first 
 Motivation Gained   High, from quick wins   Lower initially but increases over time
 Interest Savings   Lower   Higher 
 Difficulty Simple: easier to follow Complex: have to track interest rates


TL;DR:

  • Snowball focuses on behaviour and momentum.
  • Avalanche focuses on saving money on interest.


Which Debt Repayment Strategy is Better?

There isn’t a single answer that works for everyone.

You might consider the Snowball Method if you:

  • Feel overwhelmed by multiple debts.
  • Want quick progress to stay motivated.
  • Prefer a simple strategy.

You might consider the Avalanche Method if you:

  • Want to minimise the total interest you pay.
  • Are comfortable sticking to a long-term plan.
  • Have high-interest debts, such as credit cards.

Many people even combine the two approaches; Starting with Snowball to build momentum and switching to Avalanche once they’ve got some wins under their belt.

What if Unexpected Expenses Interrupt Your Repayment Plan?

Even with a solid plan, life can still throw the occasional financial curveball (you can almost guarantee it).

When that happens, it’s important to avoid adding more long-term, high-interest debt while you stay on track with your repayments.

There are a few actions you can take in those situations: adjust your repayment schedules, dip into savings, or explore short-term borrowing options to cover your essential expenses while continuing to Snowball or Avalanche.

Options such as Beforepay Pay Advance. You can get access to temporary, low-cost funds that are repaid in up to 4 instalments (aligned to your pay cycle). This can be helpful to handle one-off expenses without taking on longer-term commitments, such as a Personal Loan.

Of course, borrowing decisions should always be considered carefully based on your personal circumstances.

Tips for Sticking to Your Debt Repayment Plan

Whichever method you choose, consistency tends to matter more than the strategy itself.

You might consider:

  • Automating repayments so you don’t miss them.
  • Tracking progress monthly.
  • Avoiding new debt where possible.
  • Setting small milestones to celebrate progress.

Going slow can feel frustrating at times, but those small improvements will *ahem* snowball into a significant difference over time.

Good luck. You’ve got this.

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Further Reading


If you don’t need a loan but are looking for more ways to wrangle your finances back into good order, you might want to check out some of our other articles:

FAQs

What is the Snowball Method?

The Snowball Method is a way of handling debt that prioritises paying off those with the lowest total first, then the next lowest. It’s like a snowball rolling down a hill.

What is the Avalanche Method?

The Avalanche Method is a way of handling debt that prioritises paying off those with the highest interest first, with the aim of reducing the total amount paid over time.

Is the Debt Snowball or Avalanche Method faster?

The Avalanche Method is usually faster mathematically because it prioritises high-interest debts. However, the Snowball method may help some people stay motivated and consistent.

Which debt repayment method saves more money?

Generally, the Debt Avalanche method saves more money because it reduces the amount of interest paid over time.

Can I switch between the Snowball and Avalanche Methods?

Yes. Some people start with the Snowball Method to build momentum, then switch to avalanche once they’ve paid off a few debts.

Do these methods work with credit cards and BNPL?

Yes. Both strategies can work with credit cards, BNPL balances, personal loans, or other consumer debts.


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