Debt Snowball vs Avalanche: Which Order Should You Pay?

The only difference is the order

In both methods you pay the minimum on everything, then put every spare pound against one target debt. When that debt clears, its payment rolls onto the next. The methods disagree only about which debt is the target.

A worked example

Four debts, $500 a month available in total:

Run both orders and the outcome is close:

Avalanche wins by $165 and one month. That is a real saving, but it is about 5% of the interest — not the landslide the argument's tone often implies.

When the gap actually gets large

Avalanche pulls clearly ahead when a big balance carries a high rate and a small balance carries a low one — a $12,000 card at 24% alongside a $600 interest-free instalment plan, for instance. Snowball would clear the $600 first and leave the expensive balance compounding.

Before assuming the difference is trivial, run your own numbers. If avalanche saves you $150, pick whichever you will stick to. If it saves $2,000, that is worth some discipline.

The behavioural argument, honestly

A 2016 Harvard Business Review study found that clearing whole balances — not clearing the most expensive ones — was the better predictor of people actually finishing. The mechanism is straightforward: a debt that disappears is visible progress, and visible progress sustains effort.

That is a genuine finding, not a consolation prize. A mathematically optimal plan abandoned in month six loses to a slightly worse plan completed in month thirty-seven.

A reasonable way to choose

1. Calculate both. You cannot weigh the trade-off without knowing its size.
2. If the difference is small — say under a few hundred — choose the one you will finish.
3. If it is large, take avalanche, but consider clearing one tiny balance first for the early win.
4. Revisit after any rate change. A promotional rate ending can reorder the whole queue.

There is also a hybrid worth knowing: pay avalanche order, but if two debts are within a couple of percentage points, take the smaller one. You give up very little interest and gain a faster win.