Debt payoff method
What Is the Debt Snowball Method?
The debt snowball is a repayment strategy that targets your smallest balance first while you continue making required minimum payments on your other debts. After one debt is paid off, the money that was going to it is redirected to the next-smallest balance. That rollover is the “snowball.”
The method in five steps
- 1. List your debts by balance. Order them from smallest balance to largest. APR does not determine the snowball order.
- 2. Keep paying required minimums. Stay current on every active debt.
- 3. Direct extra money to the smallest balance. Any amount above the required minimums goes to the current target.
- 4. Roll the payment forward. When that balance reaches zero, keep the same total monthly debt budget and move the freed payment to the next-smallest debt.
- 5. Repeat until the debts are paid off. As debts disappear, more of the same monthly budget becomes available for the remaining target debts.
A simple example
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Store card | $900 | 12% | $40 |
| Credit card | $4,500 | 24% | $140 |
| Auto loan | $9,000 | 6% | $260 |
With the snowball method, the $900 store card is the first target because it has the smallest balance—even though the credit card has the highest APR. Once the store card is paid off, its former payment becomes available for the credit card while the overall monthly debt budget stays consistent.
Why people choose snowball
- The payoff order is easy to understand.
- Small balances can disappear earlier, reducing the number of active debts.
- Visible milestones may make the plan easier to stick with for some people.
The tradeoff
- Snowball does not prioritize the highest APR.
- With the same monthly budget, debt avalanche will generally minimize interest cost.
- The better choice depends on whether you value earlier account payoffs or lower modeled interest more.
Snowball vs. avalanche
Debt avalanche uses the same basic rollover idea but targets the highest-interest debt first instead of the smallest balance. Rather than assume one method is best for everyone, compare both using the same monthly payment budget.
Compare debt snowball and debt avalanche →What the calculator does
Enter each balance, APR, minimum payment, and any extra monthly amount. The calculator models minimum payments, debt snowball, and debt avalanche side by side using your inputs. Results are estimates based on the information entered; actual lender calculations, changing rates, fees, payment timing, and future account activity can change real-world payoff results.
If a payment plan is too small to reduce a balance after interest, the calculator reports that the scenario is non-amortizing instead of showing a false debt-free date.
See the tradeoff with your own numbers
Compare minimum payments, snowball, and avalanche using one consistent monthly budget.