Debt avalanche or snowball: price the difference before you choose.

Two orders, one budget

Both methods start the same way: list every debt with its balance, rate and minimum, and set one total monthly amount for debt. Every minimum gets paid. The only choice is where the leftover money goes. Avalanche sends it to the highest interest rate; snowball sends it to the smallest balance. When a debt is paid off, its minimum rolls into the extra money for the next target.

The CFPB Your Money, Your Goals toolkit includes a debt log for recording each debt's payment, due date, interest rate and balance, and a debt action plan for prioritizing. [1] Either order can be written into that plan. Neither is an official recommendation.

Worked example: the same three debts

These debts are invented. Card A: $2,500 at 27% with a $75 minimum. Card B: $900 at 18% with a $30 minimum. Loan C: $6,000 at 9% with a $150 minimum. The total budget is $500 a month, so $245 is extra after minimums. Interest is modeled monthly at rate / 12 and no new debt is added.

Avalanche targets Card A, then Card B, then Loan C. It pays off Card A in month 9, Card B in month 11 and Loan C in month 21, with $1,055.15 of total interest. Snowball targets Card B, then Card A, then Loan C. It pays off Card B in month 4, Card A in month 12 and Loan C in month 22, with $1,112.69 of total interest.

The avalanche order saved $57.54 and one month here. The snowball order closed its first account five months earlier. Both numbers come from the same model; a larger rate gap or larger balances on high-rate debt would widen the difference.

What changes the answer

• A promotional rate that ends: model the post-promotion rate from its end date, or the avalanche order can be wrong for months.
• A deferred-interest deadline: clear that balance by its deadline regardless of order, because back interest can exceed the gap between methods.
• A debt in collections or close to default: rate and balance are not the only stakes; read the agreement and consider help from a nonprofit credit counselor.
• Variable rates: recheck the order when a rate changes.
• Your motivation: if an early payoff is what keeps you making the payments, a small interest cost may be worth it.

Set up the routine once

In the worked example, the extra $245 plus each freed minimum is what drives the timeline: after Card A clears under avalanche, $320 a month goes to Card B; after both cards clear, the full $500 goes to Loan C. Without that roll-over, both orders would take far longer than the 21 or 22 modeled months.

• Write every debt into the CFPB debt log or the worksheet: balance, rate, minimum and due date from the latest statement. [1]
• Decide the total monthly amount for debt and make it automatic where possible: minimums on every account, plus the extra to the current target.
• When a target reaches $0, add its old minimum to the extra amount for the next target instead of spending it; that roll-over is what shortens both methods.
• Stop new charges on the cards you are paying down, or the model's payoff month will keep moving.
• Re-sort the list whenever a rate or promotion changes, and recheck it each quarter.

Run it on your own numbers

Fill one worksheet row per debt with the balance, APR and minimum from each latest statement, set the monthly budget, and sort the rows twice: once by rate, once by balance. If the first target is the same debt in both orders, there is nothing to decide; keep your current plan and pay it. If the orders differ, compare the totals and pick the one you will stick with. This page is US consumer education, not personalized advice, and does not consider tax effects, credit scores or hardship programs.