Avalanche vs Snowball — what's the difference?
Both strategies pay every loan's minimum every month. The difference is where any extra cash gets directed:
- Avalanche sends all the extra to the loan with the highest interest rate. This is mathematically optimal — it minimizes total interest paid because you're always attacking the most expensive debt first.
- Snowball sends all the extra to the loan with the smallest balance. You don't save quite as much interest, but you eliminate individual loans faster, which most people find motivating.
As each loan is paid off, its minimum payment cascades to the next focus loan — that's the “snowball” in snowball. The same cascade happens under avalanche. Both strategies end with the same total monthly outlay; the only thing that differs is the order.
Which one is right for you?
The honest answer is: almost always avalanche, unless you've stalled out on debt payoff before. Researchers Northwestern published in Journal of Marketing Research (2016) found that snowball's small wins keep people in the program longer, which often matters more than the math difference. For portfolios where avalanche saves $1,000+ versus snowball, take avalanche. For portfolios where the gap is tiny, take snowball — the motivation effect is real.