Compare two common payoff strategies and see how each balances total interest against motivation.
The avalanche method sends extra money to the debt with the highest interest rate first, which usually minimizes total interest. The snowball method targets the smallest balance first, which can build momentum through quicker wins.
Neither is right for everyone. Avalanche tends to cost less, while snowball may be easier to stick with. Whichever you choose, keep making at least the minimum payment on every account.
| Term | Meaning |
|---|---|
| Minimum payment | The smallest amount a lender requires each month |
| Avalanche | Pay the highest interest rate first |
| Snowball | Pay the smallest balance first |
It depends on the rate, fees and term of the new loan. Compare total cost before deciding.
It can, but results vary by situation and no outcome is guaranteed.
Compare two common payoff strategies and see how each balances total interest against motivation.
Principal, interest, taxes and insurance explained, plus how a down payment changes the amount you borrow.
Principal, interest, taxes and insurance explained, plus how a down payment changes the amount you borrow.
Disclaimer: This article is for educational purposes and is not personalized financial, investment, tax, legal, or lending advice. Read the full disclaimer.
