Jul 24, 2025
The method you choose for paying off debt depends on your mindset and your approach to finances. The debt snowball method focuses on quick wins. It allows you to pay off small debts first and build on the payoff momentum. The avalanche method puts efficiency before speed. You tackle your highest-interest debts first to focus on saving money over time.
Both strategies involve paying more than your monthly minimum payments. One isn’t necessarily better than the other, and there are important differences between them. Choosing a debt payoff strategy that works for you can help you build confidence.
We break down how each method works, the pros and cons, and how to decide which one is best for you.
Typically, the first step to paying off debt is to figure out exactly what you owe. Make a list of all your debts, including any balances on credit cards, personal loans, medical debt, student loans, and car loans. Include the interest rate for each loan in your list.
Here's an example of what this list could look like.
| Loan Type | Repayment Term | Loan Balance | Interest Rate (APR) | Monthly Payment |
|---|---|---|---|---|
| Credit Card | Revolving | $10,000 | 21.37% | $300 |
| New Car Loan | 72 months | $7,500 | 8.16% | $132 |
| Personal Loan | 72 months | $15,000 | 12.99% | $301 |
Organizing your debts can help make it easier to decide how to pay them off. (Example for illustration only. Your situation may be different.)
Once you’ve made your list, figure out your monthly expenses. How much do you spend on food, utilities, rent or mortgage, and minimum payments on all your debts? Remember, you need to pay at least the monthly minimums on all your loans, or your credit score could suffer.
Add up all your monthly expenses and subtract the total from your monthly net income (your take-home pay). Let’s say that after accounting for your expenses and setting aside a little money for savings you have an additional $300 left over to pay down your debt. Now you’re ready to decide how to use that money.
The debt snowball method focuses on paying off smaller debt first. Your payments “snowball” as you knock out smaller balances. As time goes on, you start to tackle larger balances.
With this method, you will want to look at your list of debt balances and find the smallest amount. Don’t focus on the interest rate.
The idea is that as each debt is paid off, the money you had used to pay that debt can be applied to the next-largest balance. In the example above, you would pay all your monthly minimums. Then you would put your extra $300 toward your car loan, since the $7,500 balance is the smallest. (Pay $300 plus the minimum payment.) Each month you would continue to pay down the car loan until it was paid off. This lets you pay off that balance faster.
Once the car loan is paid off, you would take your extra $300 and put it toward your credit card balance until that’s paid off. You could also add the $132-per-month minimum payment you had been making on your car loan. In this way, your payments would snowball and now reach an extra $432 per month. Finally, you would pay off the personal loan in the same way.
This method could cost you more money in interest in the long run. However, some people benefit from the more immediate sense of accomplishment it provides.
The debt avalanche method tackles the highest rates first then proceeds to the lowest. You can think of it like an avalanche falling down a mountain.
This means you pay off the debt with the highest interest rate first, rather than focusing on the balance amount. Because you are prioritizing your most expensive loans, this method may be the most cost-effective way to pay down debt.
In the example above, you would pay all your monthly minimums. Then you would put your extra $300 toward the credit card bill, because 21.37% APR is the highest interest rate. (Pay $300 plus the minimum payment.) Each month you would continue paying down the credit card debt until it was paid off.
Next, you would put that extra $300 toward the personal loan. You might even be able to increase the amount you pay, as the credit card debt has been paid off. Finally, you would pay off the car loan. In this way, you should pay less interest over time.
It depends. The benefit of the snowball method is the feeling you get from paying off a loan. In other words, getting rid of debt feels good and can give you motivation to keep going.
But saving money is also a worthy goal, which is what the avalanche method may allow you to do. Paying off the highest interest rate first means you could save money in interest charges over time. The downside is it can be hard to maintain momentum when the gratification you get from paying off smaller loans is delayed.
There are pros and cons to the debt snowball and debt avalanche methods. Comparing the two can help you determine which one could work best for your situation.
You can refer to this summary to see which method will work best for you.
| Debt Snowball Method | Debt Avalanche Method | |
|---|---|---|
| How | Pay smallest balance first | Pay highest interst rate first |
| Why | Gets rid of small loans faster | May save money on interest payments overall |
| Pros | May motivate you to keep going with quicker wins | May save money in the long term |
| Cons | May cost more in the long term | Could hurt motivation if it takes a long time to pay off loans |
Depending on your approach to money, either the debt snowball or avalanche method could work for you.
You may already know that paying off higher-interest debt can be a critical aspect of financial health. But it could also improve your mental well-being.
One survey from the American Psychiatric Association showed that 59% of adults said they were anxious about their personal finances.1 Paying down balances, however you do it, can feel like a weight is slowly lifting from your shoulders.
No matter the debt payoff method you choose, these three tips may help achieve your financial goals:
Ask yourself: How much motivation do I need? Would a quick win help me to keep going? There’s no right or wrong answer. Whatever works best for you is the method to use.
The most important thing you can do to succeed is keep going.
Be careful about increasing the amount of money you owe. It’s hard to pay off a credit card balance if you’re adding to it.
In the end, your dedication to paying off debt may give you peace of mind and open new financial possibilities.
If you’re managing several higher-interest balances, you might be able to consolidate them into one lower-rate personal loan. It could mean saving money on interest and making your monthly payments more manageable. Moreover, it might help ease any anxiety you may be feeling. 80% of surveyed customers said taking out a Discover® personal loan to consolidate debt reduced their stress. *
Want to know how a debt consolidation loan could help you pay off debt faster?
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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., (Discover) or its affiliates.
*ABOUT SURVEY
All figures are from an online customer survey conducted in September 2024. A total of 736 Discover personal loan customers were interviewed about their most recent Discover personal loan with 546 of them using the funds to consolidate debt. All results @ a 95% confidence level. Respondents opened their personal loan between January and July 2024 for the purpose of consolidating debt. Agree includes respondents who ‘Somewhat Agree’ and ‘Strongly Agree’.
