Snowball vs Avalanche: Best Way to Pay Off Multiple Debts Fast
If you're juggling multiple debts and searching for a proven, practical way to break free fast in 2025, the answer comes down to two superstar strategies: the debt snowball method and the debt avalanche method. This guide will walk through both step-by-step, compare their benefits, and help choose the best for your goals—so you can become debt-free and build true financial confidence, even if your situation feels overwhelming.
Experts recommend focusing on your debt repayment strategy as a top priority for healthier finances this year. Both methods work for credit cards, personal loans, auto loans, and student debt—so whatever your starting point, this article will get you into action!
Why Carrying Multiple Debts Is Expensive
Having a mix of credit card balances, loans and other borrowing may seem normal, but it drains your finances faster than you think. According to the OECD Global Debt Report 2025, the average household with two or more debts pays 23–38% more in interest compared to those with just one.
- Interest compounds on each account—so every month you don't pay, you owe even more.
- High credit utilization lowers your credit score, raising rates on future borrowing and insurance.
- Many people pay only minimums, stretching repayment for years and losing thousands to interest.
Tackling several debts at once with a clear method is vital for overall financial health—and for peace of mind.
Overview: Debt Snowball and Avalanche Explained
The two most popular repayment strategies in 2025 are the debt snowball method and the debt avalanche method. Both require you to make minimum payments on all debts, but differ in which loan gets your extra payments each month.
| Feature | Snowball Method | Avalanche Method |
|---|---|---|
| Focus | Smallest balance first | Highest interest rate first |
| Motivation | High (quick wins) | Moderate (slower progress) |
| Total interest paid | More | Less |
| Time to debt-free | Slightly longer | Faster overall |
| Best for | Those needing momentum | Those wanting to save maximum money |
Ultimately, both methods work—so selecting the approach that fits your personality and motivation style matters more than chasing perfection.
Step-by-Step: Using the Debt Snowball Method
- List all your debts from smallest to largest balance—forget interest rates for now. Example: ₹8,000 (personal loan), ₹14,000 (credit card), ₹23,000 (student loan).
- Keep paying minimums on all debts to avoid extra penalties.
- Throw extra cash at the smallest debt every month. Whether it's ₹800 or ₹80, any extra helps.
- Celebrate after clearing that first loan—cross it off your list!
- “Snowball” the freed-up payment to the next-smallest debt, rolling the same monthly effort higher with each payoff.
- Repeat until all debts are paid. The momentum from quick wins keeps you motivated—even when the journey feels long.
Step-by-Step: Using the Debt Avalanche Method
- List all your debts by interest rate, highest to lowest. For example: 29.9% store card, 17.9% visa, 12.5% car loan.
- Pay minimums on everything.
- Use all extra income on the debt with the highest rate. Kill off that most “expensive” debt first.
- Once that’s gone, redirect your large payment to the next-highest rate, and so on down the list.
- Repeat until you’re debt-free. The avalanche method saves the most money in interest overall, though it may take a bit longer to feel the motivation boost from knocking out a whole account.
Real-Life Case Studies: Snowball vs Avalanche
Case 1: Motivation Matters (2025)
Sangeeta, a Jaipur-based software professional, had four debts: ₹9,200 (credit card at 18.5%), ₹26,000 (personal loan at 15%), ₹11,000 (shopping card at 36%), and ₹68,000 (student loan at 8.5%). She kept struggling to stay motivated because, after years of only paying minimums, not a single loan was cleared.
When she switched to the snowball method—first clearing the lowest ₹9,200 card, then the ₹11,000 card—she gained so much confidence from seeing real progress that she stuck to the plan. Within 20 months, she was debt-free, a huge jump from her previous struggle (Read full story and financial stats here).
Case 2: Avalanche for Maximum Savings
Based on recent data from Canadian debt specialists (Hoyes, Michalos & Associates), a couple with ₹100,000 split across four debts (see table below), using ₹15,000 extra per month, paid off all debts in:
- 35 months with the snowball method—paying ₹9,978 in interest
- 34 months with the avalanche—paying only ₹8,637 in interest
| Debt | Balance (₹) | Interest Rate (%) | Order (Snowball) | Order (Avalanche) |
|---|---|---|---|---|
| Store Credit | 9,000 | 29.9 | 1st | 1st |
| Personal Loan | 28,000 | 6.5 | 2nd | 4th |
| Visa Credit Card | 34,000 | 17.9 | 3rd | 3rd |
| MasterCard | 29,000 | 19.9 | 4th | 2nd |
Case 3: Using Both for Results
Many 2025 personal finance experts, like the team at Paytm Blog, recommend blending methods: start with snowball to motivate yourself, then switch to avalanche mode to maximize savings on the remaining larger, high-interest debts.
Top Pro Tips for Paying Off Debt Faster
- Automate your payments whenever possible to avoid missed deadlines. Step-by-step automation guide.
- Cut discretionary expenses—move every possible rupee towards the current priority debt for faster results.
- Consider debt consolidation loans IF your new interest rate is much lower (compare carefully with your existing terms).
- Avoid adding new debts while on your payoff plan, so all progress counts.
- Track wins! Mark off each debt as you clear it—it’s more powerful than you expect.
- If overwhelmed, a certified financial planner or a reputable credit counselor can help streamline your plan.
-
What is the debt snowball method?It's a debt repayment strategy where you pay off your smallest debts first, one by one, gaining motivation from each quick win and rolling payments up to tackle larger debts next.
-
What is the avalanche method?This approach targets your highest-interest debts first, so you save the maximum amount on interest. Extra payments go to the costliest loan while making minimum payments on all the rest.
-
Which is better: snowball or avalanche?Avalanche saves the most money, but snowball keeps motivation high. Many people benefit from starting with snowball for quick wins, then switching to avalanche after a few payoffs.
-
How can I speed up repayment?Automate all bills, cut expenses, avoid new loans, and consider increasing income through a side hustle or selling unused items—the savings will go further on your debt.
Comments
Post a Comment