What is the avalanche vs snowball debt payoff method?

The avalanche method directs extra payments to the highest-interest debt first, minimising total interest paid over time. The snowball method pays the smallest balance first, providing quick psychological wins. Avalanche always saves more money; snowball may be more motivating if you need early momentum.

Which debt should I pay off first?

Mathematically, always pay the highest-interest debt first. Credit card debt at 20–25% APR should almost always be prioritised over mortgages (3–7%) or student loans (4–8%). The interest rate difference compounds significantly over years.

How much extra should I pay on debt each month?

Even an extra $50–$100 per month can save thousands in interest and cut years off your payoff timeline. The extra payment reduces principal faster, which reduces future interest charges — creating a positive feedback loop.

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Schuldenabbau-Rechner — Lawine vs. Schneeball

Vergleichen Sie die Lawinen- und Schneeball-Strategie zum Schuldenabbau. Sehen Sie, wie viel Zinsen Sie sparen.

Lawine spart die meisten Zinsen — $49 eingesparte zinsen (lawine vs. schneeball)

Lawine

Schuldenfrei in 81 Monaten

Gezahlte Gesamtzinsen: $14,385

Schneeball

Schuldenfrei in 82 Monaten

Gezahlte Gesamtzinsen: $14,434

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Avalanche vs Snowball: which is better?

Avalanche (mathematically optimal) — pay minimums on all debts, put extra toward the highest APR debt first. Minimises total interest paid.
Snowball (motivational) — pay minimums on all, put extra toward the smallest balance first. Faster early wins, but costs more interest overall.

For most people with similar-sized debts, the difference is small. If your highest-rate debt is also your smallest, both strategies are identical. The best strategy is the one you stick to.