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What's the difference between the 'snowball' and the 'avalanche' debt repayment methods?

Select breaks down each plan with a hypothetical budget so you can decide which is right for you.

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The best way to pay off high-interest credit card debt comes down to personal preference.

If you're motivated by saving as much money as possible down to the last penny, you'll probably prefer the "avalanche" method.

On the other hand, if getting a quick win right off the bat encourages you to keep moving forward, then the "snowball" method will likely motivate you the most.

But what's the difference between these two popular strategies? Below, Select breaks down the ins and outs of each method, using a hypothetical budget with sample numbers, so you can decide which one is right for you.

What is the avalanche method?

With the avalanche method, you pay off the balance with the highest APR first, then work your way through all your debt from highest to lowest APR. Some financial experts prefer this method because you end up paying less overall in interest.

Say you have four balances you want to pay off, consisting of two credit cards, a student loan and a car loan. Imagine you have $650 per month remaining in your budget after you've taken care of your essential expenses and padded your emergency fund to funnel toward debt repayment.

If you're doing the avalanche method, you'd arrange your balances in order of the highest APR to the lowest:

$4,200 credit card debt (22.24% APR)  minimum payment = $120

$1,300 credit card debt (15.74% APR)  minimum payment = $35

$10,750 car loan (7.2% APR)  minimum payment = $175

$6,400 student loan (6.3% APR)  minimum payment = $100

You would then pay the minimum payments on each of the three loans with lower APRs and apply whatever is left over toward the $4,200 balance with the highest APR:

$4,200 credit card debt: $340/month ($120 minimum payment + an additional $220)

$1,300 credit card debt: $35/month (minimum payment)

$10,750 car loan: $175/month (minimum payment)

$6,400 student loan: $100/month (minimum payment)

With the avalanche method, it would take you 15 months to pay off the first balance (according to the Bankrate credit card payoff calculator). Once you tackle that credit card balance, you'd focus on the next-highest APR. 

For the best results, budget the same amount each month ($650) until all of the debt is paid off: 

$1,300 credit card debt: $375/month

$10,750 car loan: $175/month (minimum payment)

$6,400 student loan: $100/month (minimum payment)

Once the third-highest APR balance is gone, you'd continue the pattern:

$10,750 car loan: $550/month

$6,400 student loan: $100/month (minimum payment)

In the end, you'll have just one loan remaining:

$6,400 student loan: $650/month

What is the snowball method?

To understand this method, think of a snowball rolling down the hill. It starts out small, but as it gets bigger it also gets faster. In theory, this is exactly how the snowball method of debt repayment works.

Using the same budget and examples as above, you would prioritize paying your debt from the smallest balance to largest, regardless of interest rate:

$1,300 credit card debt (15.74% APR)  minimum payment = $35

$4,200 credit card debt (22.24% APR)  minimum payment = $120

$6,400 student loan (6.3% APR)  minimum payment = $100

$10,750 car loan (7.2% APR)  minimum payment = $175

You would pay the minimum payments on each of the three other loans, then allocate whatever is left over to the $1,300 balance.

Sticking to our sample budget and minimum payments, your first phase would look like this:

$1,300 credit card debt: $255/month ($35 minimum payment + an additional $220)

$4,200 credit card debt: $120/month (minimum payment)

$6,400 student loan$100/month (minimum payment)

$10,750 car loan: $175/month (minimum payment)

You could knock out that first credit card balance in six months (according to the Bankrate credit card payoff calculator). Having a big win so quickly can help you feel excited to move onto the next credit card:

$4,200 credit card debt: $375/month

$6,400 student loan: $100/month (minimum payment)

$10,750 car loan: $175/month (minimum payment)


$6,400 student loan: $475/month

$10,750 car loan: $175/month (minimum payment)

And finally:

$10,750 car loan: $650/month

Which method is faster and cheaper?

If you went with the snowball method, you could pay off your first balance in six months, compared to the avalanche method, where it would take you more than a year to pay off your debt with the highest APR. If you're motivated by a quick win, then the snowball method is a better choice.

But if you crunch the numbers, the avalanche method would save you $153 in interest, and you could pay everything off in 40 months (according to Magnify Money's snowball vs. avalanche calculator), one month faster than the snowball method. If that's enough to keep you going for the long haul, the avalanche method is probably for you.

Both methods are effective and there's not a huge difference between achieving your goal in 40 versus 41 months. You may be more successful with those early quick wins. You can also change methods mid-stream — there really are no hard and fast rules. The most important thing is creating a plan that keeps you motivated. And depending on your budget, you might be surprised with how quickly you can pay off five-figure debt.

Sign up for 0% interest credit card

No matter which method you choose, using a balance transfer credit card with promotional 0% APR can help you save hundreds, sometimes thousands, in interest payments.

If you have excellent credit, you might consider the Citi Simplicity® Card, which offers 0% intro APR for 21 months on balance transfers from date of first transfer (after, 19.24% - 29.99% variable APR; balance transfers must be completed within four months of account opening). There is an introductory balance transfer fee of 3% or $5, whichever is greater for transfers completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

Or, if you want a card that will reward you for everyday expenses once you're ready to use your credit card regularly again, the Citi® Double Cash Card comes with no annual fee and rewards you with 2% cash back: 1% on all purchases and an additional 1% after you pay your credit card bill. 

Note that balance transfer fees range from 2% to 5% per transfer, but you could potentially qualify for one without a fee (view our favorites here). If you do choose to do a balance transfer, you'll want to have a clear plan to pay off the debt within the introductory 0% interest period, otherwise you might face a really high APR later on.

Bottom line

Though one debt repayment plan is based on math and the other is based on mindset, they are both equally beneficial if you use them successfully. Instead of focusing too much on which method is the right one, you should instead decide which one is right for you. 

Either approach can help you pay off five- and six-figure debt in just a few years or less depending on your financial situation, and you can always make adjustments and take breaks along the way. And learning how to use 0% APR credit card to save on interest can accelerate the process, no matter which approach you pick.

So don't worry too much about researching or crunching all of the numbers (unless that's the kind of thing that excites you). Instead, just begin and keep your focus on the path ahead.

Information about the Citi Simplicity® Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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