When it comes to paying off multiple debts, two strategies dominate: the debt snowball and the debt avalanche. But which one is right for you?
Understanding the Debt Snowball
The snowball method focuses on psychological wins. You list your debts from smallest to largest (regardless of interest rate) and attack the smallest balance first. Here's why it works:
- Quick wins keep you motivated
- Fewer debts to manage as you pay them off
- Building momentum builds confidence
Understanding the Debt Avalanche
The avalanche method is the mathematically optimal approach. You attack debts with the highest interest rates first, regardless of balance. The benefits:
- Pay less total interest
- Become debt-free faster mathematically
- More efficient use of extra payments
Which Strategy Should You Choose?
The best strategy is the one you'll actually stick with. Studies show:
- Snowball users typically complete payoff plans faster due to motivation
- Avalanche users save thousands in interest over time
- Many people use a hybrid: snowball for small debts, avalanche for large ones
💡 Pro Tip: Use Credit Hero's debt payoff calculator to compare both strategies side-by-side and see exact savings for your situation.