Debt snowball vs. avalanche: which debt strategy is better?

You've got two major payoff options: the debt snowball method and the debt avalanche method. Find out how they work -- and how to decide which is right for you.

Letting your debt payments snowball

In the debt snowball method, you concentrate on paying off your account with the lowest balance first, and only pay the minimum monthly payments on the others.

Once you've disposed of the smallest debt, you move on to the one with the next smallest balance. You work your way up (snowball your way) to tackling your biggest and baddest debts.

This method allows you to start with relatively quick wins and build up your confidence, which can be very helpful if you have debt fatigue or need to recharge your motivation.

You might be able to dump your first debt in just a couple of months, which can make your feel really good about yourself. (Way to go!) But you might be vulnerable to big interest charges on the other accounts.

Letting debt avalanche away

It takes patience and discipline to stick with the debt avalanche method.

Instead of focusing first on your smallest balance, the debt avalanche method has you start by gunning for the debt with the highest interest rate. You make only the minimum payments on the others.

This approach might help you pay off your debts faster and at a lower cost, because you'll be reducing your interest charges.

But with this method, it may be more difficult to see progress if your high-interest balances are your bigger debts that take longer to clear away.

To help you stay on your payoff track, make sure you have an emergency fund set aside to deal with any surprise expenses that might arise.

Debt snowball vs. debt avalanche: which debt payoff method should you use?