Snowball vs. Avalanche: The Best Ways to Pay Off Debt in Your 20s
Debt can feel like a weight you can’t shake. Whether it’s credit card balances, student loans, or car payments, it’s easy to feel overwhelmed—especially when you’re just starting out. But the truth is, you can pay off your debt with the right strategy.
Two of the most effective—and beginner-friendly—ways to pay down debt are the snowball and avalanche methods. This guide will explain both, help you choose which one fits your style, and show how you can build credit while doing it. If you're using a credit building app like Step or considering a credit card to build credit, understanding these methods can help you avoid costly mistakes and build a strong foundation for your financial future.
Understanding the Different Types of Debt Before You Start Paying It Off 🧾
Before choosing a debt payoff strategy, it’s crucial to understand what kind of debt you actually have—and why it matters.
Some debt is way more expensive than others. High-interest debt, like credit cards or payday loans, typically comes with double-digit interest rates—20% or more isn’t uncommon. That means your balance grows quickly if you’re only making minimum payments.
On the flip side, low-interest debt like federal student loans or mortgages tends to be more manageable. These usually offer longer repayment periods, more flexible terms, and lower rates—often between 3% and 7%.
Here’s a quick breakdown of common types of debt:
Credit cards – Unsecured, high-interest, revolving debt. Prioritize this.
Student loans – Lower interest, sometimes subsidized, with flexible repayment options.
Auto loans – Typically mid-interest. Important, but not urgent unless the rate is high.
Mortgages – Lowest priority for extra payments, as they often have low interest and long terms.
When it comes to choosing between the snowball and avalanche method, knowing the interest rates on your balances is key—especially if you're dealing with credit cards.
What Is the Debt Snowball Method? (And Who Should Use It) ❄️
The snowball method focuses on paying off your smallest balance first, regardless of the interest rate. Once that debt is paid off, you roll that monthly payment into the next smallest balance, and so on—like a snowball rolling downhill and getting bigger with each step.
✅ Pros of the Snowball Method:
Builds quick momentum and motivation
Great for people who need small wins to stay on track
Helps form the habit of consistent debt payments
❌ Cons of the Snowball Method:
You may pay more in interest over time
Not as efficient financially if your highest-interest debt is also your largest
Best for: People who are new to managing debt or who feel overwhelmed and need psychological wins to stay motivated.
Example: If you owe $300 on a store card, $900 on a credit card, and $5,000 on a student loan, you’d pay off the $300 first—then roll that payment into the $900 balance, and so on.
What Is the Avalanche Method? (And Why It Saves You More Money) 🧗♂️
The avalanche method prioritizes the debt with the highest interest rate, regardless of balance size. Once that’s paid off, you move to the next highest rate. From a math standpoint, this is the best strategy on paper.
✅ Pros of the Avalanche Method:
Saves you the most money over time
Helps you pay off debt faster if you stay consistent
Ideal for high-interest credit card debt
❌ Cons of the Avalanche Method:
Progress can feel slow if your highest-interest debt is also your largest
May be harder to stay motivated if you don’t see quick wins
Best for: People who want to minimize total interest and are disciplined enough to stick with a plan, even if progress feels slower at first.
Example: If you owe $3,000 on a credit card at 24% interest, $5,000 on a car loan at 7%, and $7,000 in student loans at 5%, you’d start with the credit card—even though it’s not the biggest balance—because it’s costing you the most in interest.
Snowball vs. Avalanche: Which Debt Payoff Strategy Is Better?
Here’s the deal: the avalanche method is better on paper—it saves you more money and time. But if motivation is your biggest obstacle, the snowball method might help you stick with it longer.
Use the snowball method if:
You need early wins to stay motivated
Your debts are small and spread across multiple accounts
You’re just getting started with budgeting or paying off debt
Use the avalanche method if:
Your priority is saving the most money
You have high-interest debt (like credit cards)
You’re confident you can stay consistent without quick emotional wins
The most important thing is that you pick one and stick with it. Either approach is better than doing nothing—and both will help you pay down debt if you stay committed.
Build Credit While You Pay Off Debt 💳
Paying off debt isn’t just about lowering balances—it’s also one of the best ways to build a solid credit history. A good credit score unlocks better loan options, lower insurance rates, and even easier approval for apartments or jobs.
Using a credit card to build credit—and paying it off on time every month—can significantly improve your score over time. And with a credit building app like Step, you don’t need to wait until you’re older to start. In fact, the average Step user has a credit score of 721 by the time they turn 18. That’s the power of building smart money habits early.
Final Takeaway: Choose Your Method and Start Today 💬
Debt doesn’t disappear overnight—but you can pay it off. Whether you choose the snowball or avalanche method, the key is to get started and stay consistent. Think about your money mindset. Do you need early wins? Go with the snowball. Want to save the most money? Stick with the avalanche.
👉 Ready to tackle your debt and build credit at the same time? Open your Step account today and take the first step toward financial freedom.
