Avalanche vs Snowball: We Calculated Which Debt Payoff Method Wins
We ran the numbers on both debt payoff strategies. The math is clear, but the best method might surprise you.
You've got multiple debts. Credit cards, personal loan, maybe a car loan. You want out. But which payoff strategy actually works best?
We ran both methods through our Debt Payoff Calculator with real numbers. The results reveal something interesting: the "best" method depends on more than just math.
The Two Methods Explained
The Avalanche Method (Math-Optimal)
Pay minimum on everything, then throw extra money at the highest interest rate debt first.
How it works:
- List debts by interest rate (highest to lowest)
- Pay minimums on all debts
- Put every extra rupee toward the highest-rate debt
- When that's paid off, roll that payment to the next highest rate
The Snowball Method (Psychology-Optimal)
Pay minimum on everything, then throw extra money at the smallest balance first.
How it works:
- List debts by balance (smallest to largest)
- Pay minimums on all debts
- Put every extra rupee toward the smallest balance
- When that's paid off, roll that payment to the next smallest
We Ran the Numbers: A Real Scenario
Using our Debt Payoff Calculator, here's what happens with a typical Indian debt profile:
The Debts:
| Debt | Balance | Interest Rate | Minimum Payment |
|---|---|---|---|
| Credit Card A | ₹2,50,000 | 42% | ₹12,500 |
| Credit Card B | ₹85,000 | 36% | ₹4,250 |
| Personal Loan | ₹4,00,000 | 14% | ₹9,500 |
| Car Loan | ₹3,50,000 | 9.5% | ₹8,000 |
Total Debt: ₹10,85,000 Extra Monthly Payment: ₹15,000
Avalanche Results (Highest Rate First):
- Order of payoff: Credit Card A → Credit Card B → Personal Loan → Car Loan
- Total time to debt-free: 44 months
- Total interest paid: ₹3,45,000
- First debt eliminated: Month 14 (Credit Card A)
Snowball Results (Smallest Balance First):
- Order of payoff: Credit Card B → Credit Card A → Car Loan → Personal Loan
- Total time to debt-free: 48 months
- Total interest paid: ₹4,12,000
- First debt eliminated: Month 5 (Credit Card B)
The Verdict:
| Metric | Avalanche | Snowball | Winner |
|---|---|---|---|
| Time to debt-free | 44 months | 48 months | Avalanche |
| Interest paid | ₹3,45,000 | ₹4,12,000 | Avalanche |
| First win | Month 14 | Month 5 | Snowball |
| Interest saved | - | - | ₹67,000 saved with Avalanche |
Why Avalanche Doesn't Always Win
The math is clear: Avalanche saves money. So why does anyone use Snowball?
The Psychology Factor
Research from behavioural economists found that people who paid off accounts faster (Snowball) were more likely to eliminate all their debt. The early wins created motivation.
The uncomfortable truth: The best debt payoff strategy is the one you actually stick with.
***** If you've tried Avalanche and given up, Snowball might save you more money in practice—even if it costs more in theory.
When Snowball Beats Avalanche
- You need motivation - If you've failed at debt payoff before
- Similar interest rates - If rates are within 2-3% of each other
- Many small debts - Quick wins reduce accounts to manage
- High stress levels - Fewer debts = less mental load
When Avalanche Is the Clear Winner
- One debt has a much higher rate - 36-42% credit card vs 10% car loan
- You're highly disciplined - Numbers motivate you more than wins
- Large high-interest debt - Waiting costs serious money
- You've done this before - You know you'll stick with it
The Hybrid Approach: Best of Both
Here's a strategy financial advisors often recommend:
Step 1: Knock out one small win first
Pay off your smallest debt for an instant motivation boost.
Step 2: Switch to Avalanche
Attack the highest interest rate debt with everything you've got.
Step 3: Stay the course
Use automation to remove willpower from the equation.
Using our example:
- Pay off Credit Card B first (₹85,000) - Done in 5 months
- Then attack Credit Card A (₹2,50,000) - The 42% killer
- Roll everything to personal loan, then car loan
Result: Quick win psychology + optimal math after month 5.
Real Scenarios: Which Method Should You Use?
Scenario A: High-Rate Credit Card Debt
Your situation:
- ₹3,00,000 on a 42% APR credit card
- ₹1,50,000 on a 36% APR card
- ₹2,00,000 car loan at 9%
Recommendation: Avalanche
The 42% card is costing you ₹1,26,000/year in interest. Every extra rupee toward that card is earning you 42% guaranteed.
! Indian credit card rates are among the highest in the world (36-42%). This makes the Avalanche method especially powerful for Indian consumers.
Scenario B: Many Small Debts
Your situation:
- ₹50,000 EMI-free purchase (0% but due soon)
- ₹75,000 credit card at 36%
- ₹1,00,000 personal loan at 16%
- ₹1,25,000 credit card at 40%
Recommendation: Hybrid
Clear that EMI-free purchase before interest kicks in, then use Avalanche for the high-rate credit cards.
Scenario C: Personal Loan + Credit Cards
Your situation:
- ₹5,00,000 personal loan at 14%
- ₹2,00,000 on credit cards at 40%
Recommendation: Avalanche (definitely)
That credit card is a 40% emergency. Attack it with everything before touching the relatively lower-rate personal loan.
The Numbers Don't Lie: More Comparisons
We ran multiple scenarios through our calculator:
Low Debt, Similar Rates
| Scenario | Avalanche Interest | Snowball Interest | Difference |
|---|---|---|---|
| ₹3L total, 15-18% rates | ₹56,000 | ₹59,000 | ₹3,000 |
| ₹5L total, 14-18% rates | ₹89,000 | ₹95,000 | ₹6,000 |
| ₹7L total, 12-16% rates | ₹1,12,000 | ₹1,21,000 | ₹9,000 |
Insight: With similar rates and lower balances, the difference is manageable. Go with whatever keeps you motivated.
High Debt, Varied Rates (Credit Cards Involved)
| Scenario | Avalanche Interest | Snowball Interest | Difference |
|---|---|---|---|
| ₹8L total, 10-40% rates | ₹2,34,000 | ₹2,89,000 | ₹55,000 |
| ₹12L total, 9-42% rates | ₹3,67,000 | ₹4,56,000 | ₹89,000 |
| ₹15L total, 8-42% rates | ₹4,89,000 | ₹6,12,000 | ₹1,23,000 |
Insight: With credit card debt involved, Avalanche saves lakhs. Worth the discipline.
Calculate your exact savings →
Your Action Plan
Step 1: List All Your Debts
Include balance, interest rate, and minimum payment (EMI) for each.
Step 2: Calculate Both Scenarios
Use our Debt Payoff Calculator to see the actual numbers.
Step 3: Assess Your Psychology
Be honest: Will you stick with the optimal plan, or do you need quick wins?
Step 4: Pick Your Strategy
- Big rate differences + discipline = Avalanche
- Need motivation + similar rates = Snowball
- Not sure = Hybrid (one quick win, then Avalanche)
Step 5: Automate Everything
Set up auto-debit instructions so you don't rely on willpower.
Common Mistakes to Avoid
1. Only Paying Minimums
Minimum payments on credit cards are designed to keep you in debt forever. A ₹1,00,000 credit card at 40% with minimum payments takes 20+ years to pay off.
2. Not Including All Debts
Be honest about everything: credit cards, personal loans, car loans, EMI purchases, buy now pay later apps.
3. Ignoring No-Cost EMI
That "no-cost" EMI? Often has processing fees built in. And if you miss a payment, the full interest kicks in retroactively.
4. Raiding Your Emergency Fund
Don't put your emergency fund toward debt. One medical emergency puts you right back on credit cards.
5. Stopping at 90%
The last debt feels endless. Push through. The final payoff is the most important one.
The Bottom Line
Avalanche saves more money. Snowball creates more motivation.
For most people with significant high-interest debt—especially credit cards—Avalanche is the mathematical winner. But if you've failed at debt payoff before, Snowball's quick wins might be worth the extra interest.
The real answer? The best method is the one you'll actually finish.
Run your numbers:
- Debt Payoff Calculator - Compare Avalanche vs Snowball for your debts
- Savings Goal Calculator - Plan what to do with your payments after you're debt-free
The day you make your last payment, none of this debate will matter. You'll just be free.