Despite What You May Read, the Debt Avalanche and Debt Snowball Methods Can Be Equally Effective — Here’s the Data That Proves It
Do you prefer your toilet paper sitting over or under the roll? Both ways get the job done, but most people have a strong (oh so strong!) preference as to which way is better. The same goes for methods to pay off debt.
There are two prominent approaches — the debt snowball and debt avalanche methods — and most people favor one or the other. However, you can’t go wrong with either.
Our newest LendingTree study looked at four hypothetical debt loads and found the two methods are nearly equally effective, and choosing either can result in significant savings.
Key findings
- Based on LendingTree researchers’ four hypotheticals, the debt avalanche and debt snowball methods can be equally effective. Across our hypotheticals, the difference in the total amount paid ranges from $0 to $1,292.
- Our most realistic hypothetical — which features average debt amounts and APRs — highlights only a $29 difference between the methods. We created a consumer who owes the average credit card debt ($7,279), average personal loan debt ($11,281), average auto loan debt ($40,851) and average student loan debt ($43,750). Regardless of the payoff method, the total amount paid would only vary by $29 and take the same period — 57 months. But the ultimate savings shouldn’t be ignored as the original payoff length for the student loan was 157 months, or more than 13 years.
- In scenario No. 2, researchers cut the debt load in half — with both methods yielding the same payment sequence. With the avalanche method focusing on the debts with the highest APRs and the snowball method on the smallest debts, our hypothetical lands on the same payment order. This shows that you could be following both methods without realizing it.
- Based on our third hypothetical, the avalanche method proves more successful with one of the higher debts having a significant APR. An individual who owes $15,000 in student loan debt, $9,000 in credit card debt and $8,000 in auto loan debt can save using the avalanche method if they owe a significant amount in debt at a higher APR — in this case, $9,000 on a credit card with a 24.06% APR. Going the avalanche route in this scenario could save our borrower $1,292 and one month.
- Our last scenario highlights someone who only owes credit card debt (but $15,000 of it), with the avalanche method coming slightly ahead again. By utilizing the avalanche method, an individual in this scenario could save $230 and pay off their debts one month earlier than they would using the snowball method.
A note of caution
Hypotheticals can be fun to show different financial scenarios. They can also be eye-opening to make you think about something differently. But situations can vary (as our hypotheticals show).
Ultimately, the best way to handle debt can depend on individual preferences, financial objectives and more. Make sure to factor in interest rates/APRs, debt amounts and how you feel about each strategy before choosing the best for you. An aggressive payoff approach won’t be the right choice for everyone but can result in significant savings.
See below for our full methodology.
Scenario No. 1: Hypothetical consumer with average debts sees virtually no difference between methods
The debt snowball and avalanche methods are both aggressive debt-reduction strategies that require you to put all your extra cash toward paying down the debt you’ve accumulated. And while they take different approaches, they have more in common than you might think. First, a look at each:
- The debt snowball method starts small, with you focusing on paying off your smallest debt first, no matter the interest rate or if it’s a secured or unsecured loan. Then, you move to the next smallest debt and pay your way off as you move up the ladder of your debt, saving the largest for last. Debt snowballing is often effective for those motivated by small victories.
- The debt avalanche method, on the other hand, starts big, with you focusing on paying off your debts with the highest interest rate first, then working your way down, saving the debts with the lowest interest rate for last. It’s attractive to those who want to crush debt with high interest rates first.
Which one works better? Despite what you may hear or read, the answer isn’t definitive.
To illustrate this, we created four hypothetical debt situations, then calculated scenarios in which the consumer used each method while making the minimum monthly payments (plus $500 extra a month). We chose an additional $500 to show off aggressive paydowns. Yes, your minimum payment toward a particular debt could increase by $500 (or more) solely by using either of these methods, but we wanted to show the impact of larger payments — especially among debtors with tens of thousands or more in debt.
In our first scenario, the hypothetical consumer has $7,279 in credit card debt, $11,281 in personal loan debt, $40,851 in auto loan debt and $43,750 in student loan debt for a whopping total of $102,981. The monthly payment — the minimum plus $500 — rang in at $2,140.97.
While our scenarios are hypothetical, this first one is the most realistic because we used average debts for the starting balances. (The originating sources are in the methodology.)
Scenario No. 1 details
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card 1 | $4,093 | $110.89 | 20.51% | Interest plus 1% of balance |
| Credit card 2 | $2,093 | $69.09 | 27.61% | Interest plus 1% of balance |
| Credit card 3 | $1,093 | $35.00 | 24.06% | Interest plus 1% of balance |
| Personal loan | $11,281 | $299.14 | 11.48% | 47 months |
| Auto loan | $40,851 | $730.21 | 6.58% | 67 months |
| Student loan | $43,570 | $396.64 | 5.80% | 157 months |
| Extra monthly payment | $500.00 | |||
| Total | $102,981 | $2,140.97 |
Avalanche method (focusing on debts with highest APRs/interest rates)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card 2 | $2,093 | $69.09 | 27.61% | Interest plus 1% of balance |
| Credit card 3 | $1,093 | $35.00 | 24.06% | Interest plus 1% of balance |
| Credit card 1 | $4,093 | $110.89 | 20.51% | Interest plus 1% of balance |
| Personal loan | $11,281 | $299.14 | 11.48% | 47 months |
| Auto loan | $40,851 | $730.21 | 6.58% | 67 months |
| Student loan | $43,570 | $396.64 | 5.80% | 157 months |
| Total | $102,981 | $2,140.97* |
* Monthly minimum payment includes $500 extra monthly payment
Snowball method (focusing on debts with lowest balances)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card 3 | $1,093 | $35.00 | 24.06% | Interest plus 1% of balance |
| Credit card 2 | $2,093 | $69.09 | 27.61% | Interest plus 1% of balance |
| Credit card 1 | $4,093 | $110.89 | 20.51% | Interest plus 1% of balance |
| Personal loan | $11,281 | $299.14 | 11.48% | 47 months |
| Auto loan | $40,851 | $730.21 | 6.58% | 67 months |
| Student loan | $43,570 | $396.64 | 5.80% | 157 months |
| Total | $102,981 | $2,140.97* |
* Monthly minimum payment includes $500 extra monthly payment
Source: LendingTree analysis of multiple data sources.
The results using both methods were nearly identical. The consumer was able to pay off the entire debt load in 57 months using either method. That’s longer than it would have taken to pay off the personal loan debt alone making minimum payments (47 months) and shorter than it would have taken to pay off the auto loan debt doing the same (67 months).
As for the interest, the total amount paid over those 57 months differed by just $29 depending on the method used. In this scenario, the debt avalanche method required $17,039 in interest, while the debt snowball method rang up $17,068.
Scenario No. 1 result
| Method | Total amount paid | Total interest paid | Total payoff time |
|---|---|---|---|
| Avalanche | $120,020 | $17,039 | 57 months |
| Snowball | $120,049 | $17,068 | 57 months |
| Difference | $29 | $29 | 0 |
Source: LendingTree analysis of multiple data sources.
Scenario No. 2: When debts are halved, hypothetical consumer has identical avalanche/snowball scenarios
In the second scenario, our hypothetical consumer has racked up half the debt load as in our first scenario — $51,491.
They have no student loan debt but have racked up bills from a credit card, personal loan and auto loan. Interestingly, when we ranked these debts according to those with the highest APRs for the avalanche method and those with the smallest debts for the snowball method, the payment order was the same. The monthly payment here was $1,764.63.
Scenario No. 2 details
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card | $10,000 | $300.50 | 24.06% | Interest plus 1% of balance |
| Personal loan | $11,281 | $371.90 | 11.48% | 36 months |
| Auto loan | $30,210 | $592.23 | 6.58% | 60 months |
| Extra monthly payment | $500.00 | |||
| Total | $51,491 | $1,764.63 |
Avalanche method (focusing on debts with highest APRs/interest rates)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card | $10,000 | $300.50 | 24.06% | Interest plus 1% of balance |
| Personal loan | $11,281 | $371.90 | 11.48% | 36 months |
| Auto loan | $30,210 | $592.40 | 6.58% | 60 months |
| Total | $51,491 | $1,764.63* |
* Monthly minimum payment includes $500 extra monthly payment
Snowball method (focusing on debts with lowest balances)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card | $10,000 | $300.50 | 24.06% | Interest plus 1% of balance |
| Personal loan | $11,281 | $371.90 | 11.48% | 36 months |
| Auto loan | $30,210 | $592.40 | 6.58% | 60 months |
| Total | $51,491 | $1,764.63* |
* Monthly minimum payment includes $500 extra monthly payment
Source: LendingTree analysis of multiple data sources.
Not only was the payoff order the same, but the time to pay off the debt and the amount of interest paid while doing so were identical. It took 34 months to pay off the debt load using either method, versus the 36 months it would have taken to pay off the personal loan debt alone and the 60 months it would have taken to pay down the auto loan debt alone.
If your smallest debts have your highest interest rates, the process and the results will largely be the same no matter which you choose, Schulz says.
Scenario No. 2 result
| Method | Total amount paid | Total interest paid | Total payoff time |
|---|---|---|---|
| Avalanche | $58,379 | $6,888 | 34 months |
| Snowball | $58,379 | $6,888 | 34 months |
| Difference | $0 | $0 | 0 |
Source: LendingTree analysis of multiple data sources.
Scenario No. 3: When we get random, avalanche stands out (but pay attention to the factors)
There are, of course, some situations in which one method trumps the other. And in our third scenario, the avalanche method does just that.
Here, we used random debt amounts and loan lengths (but with the same interest rates as the prior scenarios) for a hypothetical total debt load of $32,000.
While their student loan debt was at the top of the list ($15,000), they still owed a significant amount of debt with a high APR — $9,000 in credit card debt with a 24.06% APR.
Scenario No. 3 details
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card | $9,000 | $270.45 | 24.06% | Interest plus 1% of balance |
| Auto loan | $8,000 | $156.83 | 6.58% | 60 months |
| Student loan | $15,000 | $165.03 | 5.80% | 120 months |
| Extra monthly payment | $500.00 | |||
| Total | $32,000 | $1,092.31 |
Avalanche method (focusing on debts with highest APRs/interest rates)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card | $9,000 | $270.45 | 24.06% | Interest plus 1% of balance |
| Auto loan | $8,000 | $156.83 | 6.58% | 60 months |
| Student loan | $15,000 | $165.03 | 5.80% | 120 months |
| Total | $32,000 | $1,092.31* |
* Monthly minimum payment includes $500 extra monthly payment
Snowball method (focusing on debts with lowest balances)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Auto loan | $8,000 | $156.83 | 6.58% | 60 months |
| Credit card | $9,000 | $270.45 | 24.1% | Interest plus 1% of balance |
| Student loan | $15,000 | $165.03 | 5.80% | 120 months |
| Total | $32,000 | $1,092.31* |
* Monthly minimum payment includes $500 extra monthly payment
Source: LendingTree analysis of multiple data sources.
In this case, the avalanche method, which tackles the highest APRs first, saves significantly more than the snowball method — one month of payments and $1,292 in interest ($3,842 using the avalanche method and $5,134 using the snowball method).
“Just because these methods can have similar outcomes doesn’t mean that they will in their individual circumstance,” Schulz says. “It’s worth your time to do a little bit of math before you pick a path.”
Scenario No. 3 result
| Method | Total amount paid | Total interest paid | Total payoff time |
|---|---|---|---|
| Avalanche | $35,842 | $3,842 | 33 months |
| Snowball | $37,134 | $5,134 | 34 months |
| Difference | $1,292 | $1,292 | 1 month |
Source: LendingTree analysis of multiple data sources.
Scenario No. 4: When our hypothetical consumer has (credit card) bills, bills, bills, methods prove mostly similar
Our fourth hypothetical consumer is all about credit card debt — owing $15,000 over three cards, all with APRs above 20%. The minimum payments plus an extra $500 rang in at $956.68 monthly.
Scenario No. 4 details
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card 1 | $7,000 | $210.35 | 24.06% | Interest plus 1% of balance |
| Credit card 2 | $5,000 | $165.05 | 27.61% | Interest plus 1% of balance |
| Credit card 3 | $3,000 | $81.28 | 20.51% | Interest plus 1% of balance |
| Extra monthly payment | $500.00 | |||
| Total | $15,000 | $956.68 |
Avalanche method (focusing on debts with highest APRs/interest rates)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card 2 | $5,000 | $165.05 | 27.61% | Interest plus 1% of balance |
| Credit card 1 | $7,000 | $210.35 | 24.06% | Interest plus 1% of balance |
| Credit card 3 | $3,000 | $81.28 | 20.51% | Interest plus 1% of balance |
| Total | $15,000 | $956.68* |
* Monthly minimum payment includes $500 extra monthly payment
Snowball method (focusing on debts with lowest balances)
| Debt | Starting balance | Starting monthly minimum payment | APR or interest rate | Initial payoff length or payment structure |
|---|---|---|---|---|
| Credit card 3 | $3,000 | $81.28 | 20.51% | Interest plus 1% of balance |
| Credit card 2 | $5,000 | $165.05 | 27.61% | Interest plus 1% of balance |
| Credit card 1 | $7,000 | $210.35 | 24.06% | Interest plus 1% of balance |
| Total | $15,000 | $956.68* |
* Monthly minimum payment includes $500 extra monthly payment
Source: LendingTree analysis of multiple data sources.
Here, again, the avalanche method — tackling the card with the highest interest rate first — resulted in more savings, though not nearly as much as in scenario No. 3.
Using the avalanche method saved one month of payments (19 months versus 20 months) and $230 in interest ($3,083 was racked up using the avalanche method, versus $3,313 using the snowball method).
Scenario No. 4 result
| Method | Total amount paid | Total interest paid | Total payoff time |
|---|---|---|---|
| Avalanche | $18,083 | $3,083 | 19 months |
| Snowball | $18,313 | $3,313 | 20 months |
| Difference | $230 | $230 | 1 month |
Source: LendingTree analysis of multiple data sources.
Choosing between debt avalanche and debt snowball
How do you know which method is right for you? While you want to look at the numbers and your unique financial situation, the best method will ultimately be the one that motivates you.
For either one, the goal is the same: Getting you out of debt. Whichever option you’re most likely to stick with until that goal is met is the best one for you. You may also want to look into other options, such as debt consolidation loans. The only wrong choice is not to do anything.
“There’s an old saying, ‘The best time to plant a tree was 20 years ago and the second-best time is now,’” Schulz says. “That’s true when it comes to taking on debt as well. Don’t beat yourself up for not doing more sooner. Just get to work now and start knocking it down today. You’ll be glad you did.”
Methodology
To analyze the efficacy of the debt avalanche and debt snowball methods, LendingTree researchers created four hypothetical situations with individuals holding multiple forms of debt.
In scenario No. 1, researchers focused on average debt amounts and APRs, creating a borrower with:
- Three credit cards with varying balances that equal the average credit card debt of $7,297 (via LendingTree as of December 2022). The APRs were set based on the average, minimum and maximum APRs for all new credit card offers (via LendingTree as of June 2023).
- An $11,281 personal loan that equals the average unsecured personal loan balance (via TransUnion as of the first quarter of 2023) with an 11.48% APR (via the Federal Reserve as of the first quarter of 2023).
- A $40,851 auto loan with a 6.58% interest rate (both national averages via Experian as of the first quarter of 2023).
- A $43,570 student loan equal to the national average (via LendingTree as of December 2022) with a 5.80% interest rate (via the New America think tank as of a 2017 report).
For the credit cards, researchers set the minimum payment as 1% of the balance plus interest. Researchers randomly selected credit report data from LendingTree users in May 2023 to determine the durations for the three loans:
- 47 months for the personal loan
- 67 months for the auto loan
- 157 months for the student loan
In scenario No. 2, researchers halved the total debt amount from the first scenario. Researchers used the following debt amounts:
- One credit card with a $10,000 balance and a 24.06% APR based on the average APR for all new credit card offers (via LendingTree as of June 2023).
- The same personal loan as in scenario No. 1: $11,281, with an 11.48% APR.
- An auto loan with a $30,210 balance set to ensure the debt amount was halved in this scenario and a 6.58% interest rate, the same as in scenario No. 1.
Again, researchers set the credit card minimum payment as 1% of the balance plus interest. The loan duration terms were randomly selected: 36 months for the personal loan and 60 months for the auto loan.
In scenarios No. 3 and 4, debts were randomly selected, though we used the APRs from the above scenarios.
- For scenario No. 3, our hypothetical borrower owed $9,000 in credit card debt (with the same 24.06% APR as above), $8,000 in auto loan debt (with the same 6.58% interest rate as above) and $15,000 in student loan debt (with the same 5.80% interest rate as above). The credit card minimum payment was again 1% of the balance plus interest. The loan durations were randomly selected: 60 months for the auto loan and 120 months for the student loan.
- For scenario No. 4, our hypothetical borrower owed $15,000 in credit card debt over three cards with random APRs. The minimum payment for the three credit cards was 1% of the balance plus interest.
Researchers also assumed the individual put an extra $500 a month toward debt payments to show aggressive paydowns.
Assuming the individual is making the minimum monthly payments (plus $500), researchers estimated how long it would take to pay off all debts with the debt avalanche and snowball methods. Then, they determined which method would be quicker and more cost-effective across each scenario.