If you owe money on more than one thing, you have to decide where any extra money goes first. Every debt still gets its minimum. The question is which one gets the rest.
There are two well-known answers. They differ less than the internet arguments suggest, and the honest answer to which is better is that it depends on your numbers and on what you will keep doing for the next few years.
The two orders
- Puts the extra on the smallest balance
- Clears a debt sooner, which feels like progress
- Frees up that minimum to roll into the next debt
- Can cost a little more interest
- Puts the extra on the highest interest rate
- Usually costs the least interest
- May take longer to clear the first debt
- Frees up minimums later
Snowball: smallest balance first
- Puts the extra on the smallest balance
- Clears a debt sooner, which feels like progress
- Frees up that minimum to roll into the next debt
- Can cost a little more interest
Avalanche: highest rate first
- Puts the extra on the highest interest rate
- Usually costs the least interest
- May take longer to clear the first debt
- Frees up minimums later
A worked example
Three debts, $200 a month extra, starting September 2026. Interest is added each month at the yearly rate divided by twelve, and every debt gets its minimum.
Store card
- Balance
- $1,200
- Rate
- 19.9%
- Minimum
- $40
Visa
- Balance
- $9,000
- Rate
- 24.9%
- Minimum
- $270
Car loan
- Balance
- $14,000
- Rate
- 7.5%
- Minimum
- $320
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Store card | $1,200 | 19.9% | $40 |
| Visa | $9,000 | 24.9% | $270 |
| Car loan | $14,000 | 7.5% | $320 |
What the two orders do with those numbers
First debt cleared
- Snowball
- Store card, March 2027
- Avalanche
- Visa, October 2028
Debt-free
- Snowball
- September 2029
- Avalanche
- September 2029
Interest along the way
- Snowball
- $5,109.78
- Avalanche
- $4,995.84
Difference
- Snowball
- Avalanche
- $113.94 less
| Snowball | Avalanche | |
|---|---|---|
| First debt cleared | Store card, March 2027 | Visa, October 2028 |
| Debt-free | September 2029 | September 2029 |
| Interest along the way | $5,109.78 | $4,995.84 |
| Difference | $113.94 less |
Why the gap is often small
In this example both orders finish in the same month. The difference is the interest, and it is small compared with the total. That is common when the extra is modest and the rates are not wildly apart.
There is also a case where the two do not differ at all. If the smallest balance is also the highest rate, both methods choose the same debt first. And with no extra money at all, every debt just gets its minimum, so the order changes nothing. In the example above, paying only the minimums gives the same result under both methods: debt-free in March 2031 and $9,232.57 in interest. The extra dollars matter more than the method.
Write these down for each debt first
5 things to do
Ticks are for this visit only. Nothing here is saved anywhere.
What a simple model leaves out
Every plan like this assumes a constant rate, so a promotional rate that ends is not captured. It assumes the minimum stays the same, though on many cards it shrinks as the balance falls. And it assumes you add no new charges. Treat the dates and totals as a way to compare two orders on the same numbers, not as a forecast of what will happen.
Then choose the order you will keep. A method you abandon after six months costs more than either one. If you are also trying to understand what a minimum-only path looks like, see how long paying only the minimum takes.