Snowball vs Avalanche: How Should You Pay Off Your Debt?

Snowball vs Avalanche: How Should You Pay Off Your Debt?

Paying off your debts requires a significant amount of motivation. In fact, as of the second quarter of 2019, Singaporeans are more than $324 billion in debt, according to statistics. Of the $324 billion, almost 25% or over $80 billion is from unsecured personal loans, such as education loans, motor vehicle loans, Singapore payday loans, and more.

While debt can be a handy tool for your finances, it can also bring you some challenges, especially when it comes to repayment. At times, the sheer number of loans might feel intimidating and leave you overwhelmed. To help you, here are two of the most popular debt repayment methods that will give you some ideas on how to prioritise your debts.

Snowball method

Snowball is a debt repayment method in which you pay off your debts in order of their size, regardless of the interest rates. That means you focus on repaying your debt with the smallest balance before moving on to the one with a larger balance. As with a snowball that rolls into a bigger and bigger circle, this debt repayment method suggests that you should start with your smaller debts and work your way up.

The main objective of the snowball method is to create momentum and allow people to see their progress in repaying their debts. Often, people have so many little debts lying around, and it can be overwhelming when these debts pile up. By clearing your loans in order of their size, you can see your progress easily and begin to feel like you can pay off all your debts one step at a time. 

Avalanche method 

The avalanche method is the total opposite of the snowball method. Here, you pay off your debts in order of their interest rate, starting from the one with the highest interest rate to the lowest interest rate, regardless of their balance. In other words, this debt repayment method advocates prioritising high-interest debts before you work your way down to the debts with lower interest rates.

The main objective of the avalanche method is to save you more time and money when it comes to repaying your debts. When you clear your debts with the highest interest rates first, you eventually pay less in interest and reduce the total cost of your loans. Saving money on interest enables you to avoid repaying more than you spent, save more money in the long run and pay off your debts more quickly. 

What to consider when choosing between the two methods

The snowball and the avalanche methods are great debt repayment strategies that can help you clear your debts more quickly. They each have their advantages and disadvantages. Choosing whether the snowball or the avalanche method is better for you depends upon several factors. Here are some of the crucial factors you should consider before making your choice:

  • Your financial personality

The best repayment method for you depends mainly on your personality. If you are motivated by efficiency and do not mind the long-term debt repayment process, the avalanche method would be your best option. On the other hand, if you like seeing quick results and need the constant feeling of fulfilment to stay motivated, then the snowball method would be your ideal strategy.

  • The number of your debts

Before choosing your debt repayment method, make sure to map out all your debts first. Determine how many debts you have along with their corresponding balances and interest rates. If all of your debts have similar balances, then the avalanche method will be beneficial to you. On the other hand, the snowball method is your better choice if you have a range of small debts to some larger ones.

  • The type of debts you have

The type of your debts can impact many things, including interest rates, your refinancing options, and even your motivation. For many people, paying off their credit cards first because of their high-interest rates makes more sense. For some, on the other hand, clearing their loans in smaller amounts first keeps them extra motivated. Ultimately, when choosing between the snowball and the avalanche method, be sure to consider the bigger picture all the time.


In essence, the best method for you to pay off your debts is whichever way aligns with your situation and goals. The snowball and avalanche methods have their respective pros and cons. Knowing how they work and their primary objectives will help you determine which debt repayment method is most suitable for your current financial position.

All in all, regardless of whether you choose the snowball or the avalanche method, the most important thing is that you stay committed to clearing your debts. Being free from debt will essentially make you feel more secure about your future and allow you to enjoy the fruits of your earnings better. 

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