Using the Snowball or Avalanche Method to Pay Off Your Debt – Which is Better?


If you’re in debt and struggling to pay off multiple loans, you may be feeling overwhelmed and unsure of how to handle the financial situation you’re in. It can be difficult to figure this stuff out alone, but you may also feel embarrassed about revealing your financial situation to other people.

The thing is you’re not alone. A number of people struggle with debt, and there is help out there. Stop by Credit Canada for debt assistance help from a certified Credit Counsellor who will offer professional advice and never judge you.

They can help you come up with a strategy to help you pay off your debts. One of the solutions they may offer is a debt consolidation program where they will consolidate your unsecured debts into one monthly payment. This makes repayment simple and easy, and they can even work on your behalf to lower your interest.

Other solutions they may recommend is to try out the snowball or avalanche methods of debt repayment. Not familiar with them, or want to know more about them? Keep reading for more info.

Avalanche Method

The avalanche method works by focusing on paying your debt or credit card with the highest interest rate first. While doing this, though, it’s important to maintain paying your minimum monthly payments on all your other debts and credit cards.

Once the debt  with the highest interest rate is paid off in full, you move onto the next highest one. By using this strategy you can slow the rate at which your current outstanding debt grows because of high interest rates. Many financial experts argue this is the best way to do it since maintaining a debt with high interest will only spiral you further into debt.

Snowball Method

The snowball method works a little differently than the avalanche. With this one, you pay off the debt with the smallest balance first, even if it has the highest rate, while still making minimum payments on all your other debts and credit cards. Once that one is paid off, you move onto the next smallest, and so on. Again, interest rates have no bearing on which you choose to pay.

Many people prefer this method because it means you can get rid of smaller debts quickly and not have to worry about them, especially if they are relatively small. Another upside to this method is that it can be very motivating as you feel a sense of accomplishment because you paid something off.

Which is Better?

While both methods have their positives and negatives, it really depends on your specific financial situation, as well as your personality. If you think that you’ll be more motivated to pay things off on the snowball method, then this may be the solution for you. On the other hand, if you want to avoid paying high interest rates, then it’s best to choose the avalanche method – especially if you have ones that are really bringing you down.