Paying off debt can feel overwhelming—especially when you’re balancing multiple balances at once. High-interest balances—like those one some credit cards—are often the hardest to manage, which is why having a clear payoff strategy matters. If you’re looking for a clear, realistic way to get out of debt, understanding the difference between the debt snowball and debt avalanche methods can help you choose a plan you’ll actually stick with.

What is a debt snowball?

The debt snowball method is a payment strategy where you pay off your debts from smallest to largest. It’s part psychological (because you see your payments get paid off one by one, which further incentivizes you) and part practical because as you pay off one debt, you have more money each month to throw at the next one.

Here’s how it works:

  1. Determine the amount of each of your debts and list them out smallest to largest.
  2. Add up your minimum payments on each and determine how much extra money you have each month.
  3. Put all extra funds towards your smallest debt each month until it’s completely paid off.
  4. Put the minimum payment that would have gone towards your initial smallest debt towards your next smallest debt, as well as all additional funds you have each month. Do this each month until that one is paid off.
  5. Repeat until you are debt free!

Many members using the snowball method pair it with digital banking to track balances and see progress as debts are paid off

Pros: This strategy keeps you motivated as you have fewer bills to pay each month. It’s easier to stay focused on the plan because more money becomes available to you each month. Whether you’re paying off credit cards, medical bills, personal loans, or all of the above, this method will help keep your eye on the ball.

Cons: One downside to this approach is that you may end up paying more in interest over time depending on which cards you pay off first. That’s why some financial experts suggest the next method instead.

What is a debt avalanche?

With the debt avalanche method, you pay off the debt with the highest rate first in order to save money on interest over the long run. If your highest-interest balances include credit cards or personal loans, the avalanche method may help reduce interest costs over time. Once the highest rate account is paid off, you move on to the next account with the highest interest.

Here’s a step-by-step look at how it works.

  1. As with the debt-snowball method, you first list out your debts, but this time you list them out by highest interest rate instead of balance.
  2. Make minimum payments on every account except the account with the highest interest rate.
  3. Put all additional money towards the account with the highest interest rate until it’s paid off.
  4. Move on to the account with the next highest interest rate until it is paid off.
  5. Repeat all steps until you are debt free.

Pros: The debt avalanche saves you money in interest over time. Once your highest interest rate is paid off, you’ll start saving more money as each account is paid off.

Cons: A major con with the debt avalanche method is that it can feel like you’re not making a lot of progress at first. Compared to the debt-snowball method, it can take time to see the fruits of your labor.

Which debt payoff method works best?

It depends on you. Some people like seeing their debts get paid off one by one. Other people like knowing they’re saving money by going after the accounts with the highest interest. If you’re on the fence, it may be worth your while to plug in some numbers into a payment calculator. It’s also OK to experiment and switch methods. The key thing is to have a plan. No matter which method you choose, using tools like online banking can help you organize payments and stay consistent.