Avalanche or snowball? Two ways to pay off debt, and how to choose

If you have several debts, you've probably wondered which to pay first. There are two popular methods. Both work. They just work differently.

The avalanche: highest rate first

Make the minimum payment on every debt. Put every extra dollar toward the debt with the highest interest rate. When it's gone, move to the next highest.

Why people like it: it saves the most money in interest and usually gets you debt-free fastest.

The catch: if your highest-rate debt is also your largest, it can take a long time before you see one disappear.

The snowball: smallest balance first

Make the minimum payment on every debt. Put every extra dollar toward the debt with the smallest balance. When it's gone, roll that payment into the next smallest.

Why people like it: quick wins. Crossing off a debt early feels great, and that motivation keeps many people going.

The catch: you may pay more interest overall.

How to choose

If you're disciplined and motivated by numbers, the avalanche usually makes sense. If you've tried before and lost steam, the snowball's early wins may matter more than the extra interest.

Either way

• Stop adding new debt while you pay down the old
• Automate the minimum payments so you never miss one
• Ask your lender about a lower rate. It doesn't always work, but it costs nothing to ask
• If debt feels unmanageable, a non-profit credit counselling service can help you look at options

The method matters less than the momentum.