The debt snowball is a payoff order that targets the smallest balance first, regardless of its interest rate. Pay the minimum on every account, then direct every extra dollar at the smallest remaining debt until it is gone.
How it works
- Cover the minimum payment on every debt.
- Rank the remaining debts by balance, smallest first.
- Put all extra money toward the smallest.
- When it clears, add its freed-up minimum to the extra amount and move to the next-smallest.
The name comes from step four. Each cleared account adds its old minimum to the pile rolling downhill, so the payment aimed at the target grows steadily even if you never increase what you contribute.
Why anyone chooses it
It usually costs more in total interest than the avalanche order. What it buys is a completed payoff early — sometimes within the first month or two — and one fewer account to manage.
That matters more than it sounds. The most common way a payoff plan fails is abandonment, not arithmetic. A visible result early makes the plan feel like it is working, which is the condition under which people keep going.
When the difference is small
If the interest rates across your debts are close together, the two orders produce nearly the same total cost, and the snowball is close to free. The gap widens when one large balance carries a much higher rate than everything else — that is the case where the avalanche order is worth real money.
What neither order changes
Both require every minimum payment to be covered first. Skipping a minimum on one account to accelerate another triggers late fees and can raise your rate, which erases the benefit of any ordering.
See also Debt avalanche and Debt Avalanche vs. Snowball.