When you’re drowning in a pool of accumulating debts, figuring out how to emerge isn’t always straightforward. With varying interest rates and payment terms, some people lose faith that they can become debt-free.
There are numerous strategies that can help you stay on track to pay off your balances, and the debt snowball is one of the most popular.
Depending on your personality, the feeling of achieving “quick wins” from the debt snowball method can provide the nudges you need to keep making your payments, according to Tanya Taylor, a New York City-based certified public accountant and personal finance consultant with decades of experience in the banking and insurance industries.
Keep reading to understand what the debt snowball method is, how it works and whether it is right for you.
What Is the Debt Snowball Method?
The debt snowball method is one of several debt repayment strategies you might consider if you hold numerous debts with accumulating interest. Essentially, you prioritize paying off the loan carrying the lowest balance first, slowly building up your metaphorical “snowball” of paid-off debt.
How Does the Debt Snowball Method Work?
You can quickly begin using the debt snowball method by following these steps:
1. Make a list of every debt — from student loans to car notes to credit card balances — that you still have to repay. Note the respective remaining balances and interest rates.
2. Next, rearrange your list so your debts are in order of balance size, from smallest to largest.
3. Continue paying the minimum monthly amount due on all debt accounts, except the one with the smallest balance.
4. For the smallest debt, make the minimum monthly payment plus whatever additional amount your budget will allow.
5. Once the smallest debt is paid off, take all the money you were spending on that monthly bill and apply it to the second-smallest debt on your list.
6. Continue that pattern of paying off each debt balance and then driving its payment into the next smallest debt until you’re debt-free.
The Debt Snowball in Action
Let’s take a look at how the debt snowball works in real life. Assume you have the following debts and monthly payments.
| Debt | Interest Rate | Monthly Payment | Remaining Balance |
| Furniture purchase | 0% | $100 | $800 |
| Student loan | 5% | $400 | $16,000 |
| Car loan | 8% | $350 | $10,000 |
| Credit card (1) | 17% | $40 | $2,000 |
| Credit card (2) | 24% | $55 | $1,500 |
Assuming you have an extra $200 per month to pay down your debt, that money should first go to pay off your furniture purchase. Even though no interest is being charged on this debt, the goal here is to get a quick win. With only an $800 balance, you’ll have eliminated that debt in less than three months by making $300 monthly payments.
Then, you take that $300 and put it toward the next smallest debt. In this case, that’s your second credit card. With $355 payments, that debt will be gone in about four months. Keep following this pattern of rolling your payments toward the debt with the next smallest balance.
By the time you get to your student loan — the debt with the largest balance — you’ll be making $1,145 monthly payments. At that point, you should be debt-free in less than a year.
The key to making this work? Not going into additional debt. Doing so will reduce the amount of money you can add to your snowball. You also need to make timely minimum payments on all your other debts throughout this process so you don’t get hit with fees or penalty APRs.
[Read: Credit Cards for Building Credit]
Debt Snowball Method Pros
The benefit of using the debt snowball method is to feed your inner need for “quick wins,” Taylor says. Securing faster financial victories by wiping a debt from your budget can propel you forward when you otherwise might feel less motivated to keep going.
“If you’re paying on debt over and over and you can’t see any changes, a lot of times people get discouraged and they just don’t really want to pay anymore, or pay the minimum, or follow their plan anymore,” she says.
Leslie H. Tayne, a financial attorney at Tayne Law Group in New York, agrees that the main benefit of this method is encouraging the debt holder to see progress in their repayment and continue along a financially healthy path.
“Emotionally and mentally, you can see accounts paid off faster, so some people like it because it provides a quicker (psychological) payoff,” Tayne says.
Paying off balances quickly can motivate you to make smart money choices. Getting takeout might not seem so appealing when you think about how close you are to paying off your next debt and how that money could be added to your debt snowball.
Debt Snowball Method Cons
Getting those quick wins can come at a financial price, though.
The debt snowball method entirely prioritizes internal motivation over maximum savings.
As a result, you simply might not save as much money in overall payments as you would if you tackled the most-expensive — but most difficult — debts first. That’s because the debts you prioritize paying off under the debt snowball method are not necessarily the debts with the highest accumulating interest.
[Credit Card Minimum Payments and the Debt Treadmill]
Debt Snowball Method vs. Debt Avalanche Method
The debt snowball and debt avalanche techniques are “the two most common debt repayment methods” for typical consumers, Taylor says. Both are accelerated repayment techniques, but the debt avalanche method can potentially save you hundreds of dollars more than the debt snowball method.
That’s because the debt avalanche method flips the script of the snowball method. Instead of paying the lowest remaining balances first, the avalanche method dictates that you prioritize any additional payments on the debt with the highest interest rate first. It might work best for a disciplined individual who can intrinsically keep up their repayment motivation.
Nevertheless, both methods will help you pay off your debt more quickly than if you merely made minimum payments across all your debts every month.
“There isn’t one method that works best for everybody,” according to Tayne. She notes that your family circumstances, your present and future cash flow, and the types of debt you hold can all factor into which method, or methods, of accelerated debt repayment you want to try.
“There’s so many factors that go into determining what the best possible method is — what’s really going to be most successful and motivating for the individual debtor who’s trying to pay off their debts,” Tayne says. “There needs to be flexibility within these methods” because of changing personal circumstances, she adds.
The most important thing, she says, is making consistent payments and reevaluating every month how much you can actually afford to drive into your repayments beyond the minimum amount due.
When Should I Use the Debt Snowball Method?
Consider using the debt snowball method when you are losing motivation to carry on making timely minimum payments or feeling discouraged chipping away at larger amounts of debt every month.
Debt snowballing helps you visually see the total number of debts dwindle away, giving you a powerful psychological kick to keep going as you hit additional benchmarks — even if you are not necessarily saving the most money in the long run.
“Most Americans have multiple credit cards or multiple types of debt,” Taylor says. “I think that as long as you have three or more debts, you should start thinking about, ‘what is my repayment method?'”
The debts do not necessarily have to stem from different types of loans or credit lines; for example, you could carry high balances on several different credit cards or have debt remaining on multiple student loans.
But regardless of how many debts you have, Taylor suggests selecting a debt repayment plan when you rack up around $5,000 in total balances.
More from U.S. News
15 Money Moves You’ll Be Thankful For
How to Negotiate With Debt Collectors
7 Methods for Paying Off Student Loan Debt
How Does the Debt Snowball Method Work, and When Should You Use It? originally appeared on usnews.com
Update 05/08/26: This story was published at an earlier date and has been updated with new information.