Debt Snowball or Debt Avalanche: Which is Better?
- UpdatedSep 20, 2024
- Debt avalanche and debt snowball are both ways to get you out of debt when you have several accounts.
- The snowball targets accounts by size, smallest to largest.
- The avalanche targets accounts by interest rate, from highest to lowest.
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When it comes to resolving debt, there isn’t a one-size-fits-all solution. Some people may be able to reduce debt on their own, and others may need professional help. If you are looking to pay down debt on your own, you may have heard about two popular approaches: the snowball and avalanche methods.
You may be wondering what snow has to do with resolving debt. These are two common terms that people use to describe techniques for tackling debt. Whether you choose the debt snowball or debt avalanche method should really depend on your personality, your goals, and what motivates you. What works for one person doesn’t work across the board for everyone else.
The following information will help you get a general understanding of these two popular debt payment strategies so you can decide whether debt snowball or debt avalanche (or something else altogether) works best for you.
Debt avalanche
If your foremost goal is to save money and resolve your debt in as short a time as possible, the debt avalanche method could be right for you. When you use this method, you tackle your debt with the highest interest rate first (typically a credit card).
The avalanche method of debt reduction is like working from the hardest to the easiest debt. You start from the top and work your way down, like an avalanche falling from a mountain. The aim of the debt avalanche method is to pay as much as possible on debts with the highest interest rates while making at least minimum payments on the rest.
After you succeed in paying off your high interest debt with the debt avalanche method, you proceed with the next one. Keep doing this until your debts are resolved.
The avalanche method of debt reduction is a more aggressive repayment strategy than making minimum payments, but you will probably reduce your debt load more quickly this way. It’s sometimes easier said than done to use the debt avalanche method, because everyone wants to save money, but you need to be disciplined enough to stick with the plan, even when money gets tight.
Debt snowball
On the other hand, the debt snowball method plays off of emotion. The idea is that getting quick wins, like paying off your smallest debt first, will motivate you to keep moving forward toward your end goal. With the snowball method of debt reduction, you start off small and pay off your debts one by one until it is finally gone. Like the term suggests, the snowball method of debt reduction comes from the idea that you gain momentum, building from the smallest to the largest debt.
When using the snowball method of debt reduction, make sure you are making at least minimum payments on all of your other accounts. This is a good method to use if you need to see results quickly and want a debt reduction plan that is simple to follow.
Which debt reduction method is right for you—debt snowball or debt avalanche?
Mathematically speaking, the avalanche method of debt reduction is often cheaper and faster overall. You get rid of the more damaging debts first because higher interest means you’ll have to pay back more over time. However, the snowball method of debt reduction can help you build confidence, assuming that early success will motivate you to pay off the rest of your debts.
Regardless of whether you choose the debt snowball or debt avalanche method, make sure to develop a sound financial plan and stay disciplined. The longer you stick with it, the more likely you are to succeed. Remember that getting out of debt is possible; you just need a plan that works.
Find the best solution for getting out of debt
If you’re struggling with debt, it may be worthwhile to try one of these payment methods. However, if it is too much to deal with on your own, Freedom Debt Relief can help you understand your other options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can help put you on the path to a brighter financial future. Find out if you qualify right now.
Debt relief by the numbers
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during August 2024. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.
Debt relief seekers: A quick look at credit cards and FICO scores
Credit card usage varies significantly across different age groups, reflecting diverse financial needs and habits.
In August 2024, the average FICO score for people seeking debt relief programs was 582.
Here's a snapshot by age group among debt relief seekers:
| Age group | Average FICO 9 credit score | Average Credit Utilization |
|---|---|---|
| 18-25 | 565 | 93% |
| 26-35 | 575 | 91% |
| 35-50 | 578 | 89% |
| 51-65 | 583 | 87% |
| Over 65 | 597 | 82% |
| All | 582 | 88% |
Use this data to evaluate your own credit habits, set financial goals, and ensure a balanced approach to managing credit throughout your life.
Collection accounts balances – average debt by selected states.
Collection debt is one example of consumers struggling to pay their bills. According to 2023, data from the Urban Institute, 26% of people had a debt in collection.
In August 2024, 28% of debt relief seekers had a collection balance. The average amount of open collection account debt was $3,092.
Here is a quick look at the top five states by average collection debt balance.
| State | % with collection balance | Avg. collection balance |
|---|---|---|
| Nevada | 29 | $5,116 |
| Utah | 23 | $4,223 |
| Montana | 31 | $4,194 |
| Maine | 30 | $4,141 |
| Deleware | 28 | $3,911 |
The statistics are based on all debt relief seekers with a collection account balance over $0.
If you’re facing similar challenges, remember you’re not alone. Seeking help is a good first step to managing your debt.
Tackle Financial Challenges
Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.
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