Credit card and loan balances can feel overwhelming. The debt snowball method gives you a simple plan to start making progress. With the debt snowball method, you pay off your smallest balance first while you make minimum payments on all other accounts. Each time you eliminate a balance, you roll that payment into the next smallest debt. The result is a growing “snowball” of payments that helps you move faster toward zero balances.
How the debt snowball method works
Let's look at a step-by-step breakdown of the debt snowball method:
- Make a list of your debts from smallest balance to largest balance
- Pay more than the minimum on the smallest balance while making minimum payments on all other accounts
- When the smallest balance is paid off, roll that payment amount into the next-smallest balance
- Repeat the process until you pay off all debts
Example of the debt snowball
Say you have three balances: $500, $1,000 and $2,000. You put $300 per month toward the $500 balance and make minimum payments on the other two.
You could clear the $500 balance in about 2 months. You then add that $300 to the payment you’re making for the $1,000 balance. Your payment “snowball” grows each time you pay off a balance, helping you accelerate progress.
Pros and cons of the debt snowball method
Here are some pros and cons you may want to understand when considering the debt snowball method:
Pros
- Quick wins on smaller balances can boost motivation
- Simple plan that’s easy to follow
- Consistent focus can help strengthen your money management habits
Cons
- The debt snowball method does not consider interest rates, so you could pay more in interest if larger balances carry higher interest rates
- Directing extra cash to debt may leave fewer reserves for emergencies
Debt snowball method vs. debt avalanche method
The debt avalanche method prioritizes the balance with the highest interest rate first to minimize total interest. If your larger balances have much higher interest rates, the avalanche could save you money. If you need early wins to stay engaged, the debt snowball method may be the better fit. You can also combine approaches by starting with a few quick snowball wins, then switching to the highest interest rate debt.
Consider the table below for reference:
| Debt snowball method |
Debt avalanche method |
|---|
| Smallest balance first |
Highest interest rate first |
| Quick wins create momentum |
Saves the most money long term |
| Simple and easy to follow |
Requires tracking interest rates |
| Staying motivated and seeing progress fast |
Minimizing interest paid overall |
| May cost more in interest if larger balances have high interest rates |
Progress may feel slow at first with large balances
|
Both strategies can help you pay off debt — the best choice depends on what keeps you moving forward.
Tips to make the debt snowball method work
If you're trying to make the most out of the debt snowball method, keep these tips in mind:
- Automate minimum payments to help you avoid missing a due date
- Track your balances every month so you see momentum build
- Avoid adding new debt while you work your plan
- Keep a small emergency fund so surprises do not derail progress
Debt snowball method: Frequently asked questions
Why is the debt snowball method effective?
The debt snowball can be effective because it gives you quick wins by eliminating small balances first, which can build motivation and momentum to keep going.
Who should use the debt snowball method?
The debt snowball may be best for you if you need simple steps, want to stay motivated with early progress and prefer a straightforward plan for paying off debt.
Does the debt snowball method save money on interest?
Not always. Because the debt snowball method does not prioritize high-interest balances, you may end up paying more in interest compared with the debt avalanche method.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
