Snowball vs Avalanche: What’s the Best Way to Pay Off Multiple Credit Cards?

Woman looking at paperwork

When it comes to paying down debt across multiple credit cards, there are two main debt reduction strategies: the debt snowball method and the debt avalanche method. While the snowball method is probably better known and has many prominent proponents, critics argue that you actually come out ahead using the avalanche method.

The snowball method suggests that when you’re paying off multiple credit cards, it’s best to pay off the card with the smallest balance first before moving on to the next smallest and so on. The idea is to pay as much as you can towards the smallest debt while sticking to the minimum payment for the remaining cards. Once the first card is paid off, you can then focus on the next card.

Critics of the snowball method argue that it’s better to pay off the card with the highest interest rate first before moving on to the card with next highest rate. This method is called the avalanche method and just looking at the numbers, it seems like a more efficient way to pay off your debt as you pay less interest over time.

While proponents of the snowball method readily admit that the numbers make a strong case for the avalanche method, they point to the psychological advantage of the snowball method. As smaller debts are paid off, you feel a sense of accomplishment and these “quick wins” are important to keep you motivated.

Both methods have their merits and ultimately it boils down to deciding which is more important to you: the motivational edge the snowball method offers or knowing that you’re paying less in interest with the avalanche method.