Avalanche or snowball
When you have several debts and some spare money each month, there are two sensible orders to pay them off in. Avalanche targets the highest rate first and costs the least. Snowball targets the smallest balance first and finishes something soonest.
The argument between them is usually conducted without numbers, which is a shame, because the numbers are the interesting part: the gap is often smaller than either side assumes.
How both methods work
The mechanics are identical and only the target changes. Every debt keeps receiving its minimum payment. Whatever you have spare goes at one chosen debt. When that debt clears, its entire payment — minimum plus extra — rolls onto the next one, so the amount attacking the remaining debts grows each time one falls.
That rolling is where the snowball gets its name, and it happens under both methods. The only decision is which debt to point it at: the one costing the most, or the one that will disappear first.
Nothing else changes. The same money goes out each month either way, so the comparison is genuinely like for like.
What the difference actually costs
Take three debts: $1,200 at 7%, $4,800 at 22% and $9,500 at 18%, with $200 a month spare. Avalanche goes at the 22% card first and clears everything in three years, costing $4,550.03 in interest. Snowball goes at the $1,200 first and clears everything in three years and one month, costing $4,885.87.
The avalanche saves $335.84 and one month. On $15,500 of debt over three years, that is a difference of about seven per cent of the interest, and under two per cent of the total repaid.
What the snowball buys for that $335.84 is a debt gone in six months instead of eighteen. Whether that is worth it is not an arithmetic question. It is a question about whether you will still be doing this in month twenty, and for a lot of people visible progress is what makes the answer yes.
$1,200 at 7%, $4,800 at 22%, $9,500 at 18%, $200 extra
Avalanche 36 months, $4,550.03 interest
Snowball 37 months, $4,885.87 interest
Difference $335.84 and one month
Work it out: Debt Payoff Calculator →
The minimum payment is the real trap
Both methods beat the alternative so comprehensively that arguing about them is almost a distraction. A $5,000 balance at 22% paid at $200 a month clears in two years and ten months and costs $1,749.88 in interest.
The same balance paid at the minimum — typically two per cent of what is outstanding — takes sixty-eight years and one month and costs $35,957.75.
That is not a typo. Minimum payments are a percentage of the balance, so they shrink as the balance shrinks, and the payment ends up chasing the interest down without ever catching it. A fixed payment, even a modest one, is a fundamentally different instrument from a percentage one.
$5,000 at 22%
At $200 a month 2 years 10 months, $1,749.88 interest
At the minimum 68 years 1 month, $35,957.75 interest
Work it out: Credit Card Payoff Calculator →
Consolidation moves the debt, it does not remove it
Rolling several debts into one loan lowers the rate, fixes the payment and gives you a single date to work towards. Those are real benefits, and for anyone juggling five minimums they are worth having on their own.
What consolidation does not do is reduce what you owe. It usually lengthens the term, which lowers the payment and can raise the total paid even at a better rate — the same trade that makes a long car loan feel affordable.
The failure mode is well documented and worth naming: the cards get consolidated, the cards stay open, the balances come back, and the position is worse than before because now there is a loan as well. The consolidation is the easy part; not refilling the cards is the whole job.
Work it out: Debt Consolidation Calculator →
Questions
Is avalanche or snowball better?
Avalanche always costs less on paper — in the example here, $335.84 and one month less on $15,500 of debt. Snowball clears the first balance a year sooner. If seeing progress is what keeps you going, that is worth paying for.
How much does the choice actually cost?
Less than most people expect. On three typical debts it worked out at about seven per cent of the interest, or under two per cent of the total repaid. The gap between either method and paying minimums is enormously larger.
How long does it take to clear a card on minimum payments?
Decades. $5,000 at 22% paid at a 2% minimum takes sixty-eight years and costs nearly $36,000 in interest, because the payment shrinks as the balance does.
Why is a fixed payment so much better than a minimum?
A minimum is a percentage of the balance, so it falls as you pay down and the progress slows to nothing. A fixed payment keeps the full amount attacking a shrinking balance, which is what makes it finish.
Does consolidating debt save money?
It can lower the rate and always simplifies the admin, but it often lengthens the term, which can raise the total paid. And it only works if the cleared cards stay cleared.
Should I keep paying minimums on the other debts?
Yes. Both methods pay every minimum every month and only direct the spare money at one target. Missing a minimum costs fees and damages your credit file, which is far more expensive than any ordering decision.