Loan Payment Strategies: Snowball vs Avalanche and More
Compare debt repayment strategies like the snowball and avalanche methods to find what works best for you.
Choosing the right loan repayment strategy can save you thousands of dollars and years of payments.
The Avalanche Method
Pay minimums on all debts, then put extra money toward the debt with the highest interest rate.
Pros: Saves the most money on interest
Cons: May take longer to see debts disappear
Example
|------|---------|------|---------|
Avalanche order: Card A → Card B → Car Loan
The Snowball Method
Pay minimums on all debts, then put extra money toward the debt with the smallest balance.
Pros: Quick wins for motivation
Cons: May pay more interest overall
Snowball order: Card B → Card A → Car Loan
Avalanche vs Snowball Comparison
With $700/month total budget for the above debts:
- Avalanche: Debt-free in 34 months, $3,420 total interest
- Snowball: Debt-free in 35 months, $3,650 total interest
The difference is often smaller than people expect.
Other Strategies
Debt Consolidation
Combine multiple debts into one loan at a lower rate. Best when:
- Your credit score qualifies for a lower rate
- You will not accumulate new debt
Balance Transfer
Move high-interest debt to a 0% introductory APR card. Watch for:
- Transfer fees (typically 3–5%)
- When the promotional period ends
Extra Payment Strategies
- Bi-weekly payments: Make half your monthly payment every two weeks (results in 13 full payments/year instead of 12)
- Round up: Round your $347 payment to $400
- Windfalls: Apply bonuses and tax refunds to debt
Use our loan calculator to model different payoff scenarios.