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Accelerate your debt payoff: avalanche vs. snowball method
Accelerate your debt payoff: avalanche vs. snowball method

Looking to pay down your debt ASAP? Learn more about the Avalanche and Snowball method to pick your strategy

Sabrina avatar
Written by Sabrina
Updated over a week ago

Looking for ways to pay off your debt ASAP? πŸ™‹

There are two main methods to accelerate your debt payoff plan when dealing with multiple debt payments: the Avalanche method and the Snowball method. Which method you choose will depend on personal preference, and both will require making a payment beyond the minimum payments due across your outstanding debts (tip: use Rocket Money to find extra savings). The good news? Finding that extra payment can save you hundreds or thousands of dollars in interest over time! πŸŽ‰

Depending on which method you pick, you'll need to list all of your individual debts, including balances and interest rates.

For the Avalanche method, you'll list your debts from highest to lowest interest rate, regardless of the balance. You can find the interest rate for each of your debts on your most recent statement.

Lender

Balance

Interest Rate

Credit Card 1

$9,300

24%

Credit Card 2

$1,325

19%

Student Loan 1

$14,500

5%

For the Snowball method, you'll list your debts from lowest to highest balance, regardless of the interest rate.

Lender

Balance

Interest Rate

Credit Card 2

$1,325

19%

Credit Card 1

$9,300

24%

Student Loan 1

$14,500

5%

Then, you'll apply any payment above the minimum payments to either the highest interest debt or the lowest balance debt, depending on the strategy. For example, let's say you have an additional $50 to apply to an outstanding debt. For the avalanche method, you would make all of your minimum payments, then apply the extra $50 to Credit Card 1 (with the highest interest debt). Once Credit Card 1 is paid off, you would move to Credit Card 2 on the list.

Example using the Avalanche method:

Lender

Balance

Interest Rate

Minimum Payment

Additional Payment

Credit Card 1

$9,300

24%

$372

$50

Credit Card 2

$1,325

19%

$53

Student Loan 1

$14,500

5%

$151

If you were using the Snowball method, you would start with the lowest balance debt (Credit Card 2) and then once that is paid off, move on to the next lowest balance debt (Credit Card 1).

Still not sure which method to pick? We're here to help! Below are some of the pros and cons of each method:

Method

Pros

Cons

Avalanche πŸ”

Saves you the most in interest payments over time

Might take longer to pay off a single debt than the Snowball method.

Snowball ❄️

Helps you pay off an entire single debt the fastest, giving you a "quick win" to help keep you motivated

Will cost you more in interest payments over the long run than the Avalanche method.

Can take longer than the Avalanche method to pay off ALL your debt

No matter which method you choose, either strategy will help in paying down your debt more quickly.

Not able to meet your minimum payments? Use Rocket Money to save you money or consider whether a debt management plan might be right for you.

Still have questions? Feel free to reach out to a member of our customer support team within the Rocket Money app or by visiting rocketmoney.com/contact.

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