By Shea Sanche, CFP® · Last reviewed: April 2026
Two popular debt repayment strategies, one practical question: which one actually works better - and for whom? Here's an honest comparison.
The Avalanche Method: Mathematically Optimal
The avalanche method directs all extra debt payments to the balance with the highest interest rate first, while making minimum payments on all other debts. Once the highest-rate debt is eliminated, you redirect that payment to the next-highest rate, and so on. From a pure interest-cost perspective, the avalanche method is superior - you pay less total interest because you're eliminating the most expensive balances first.
The Snowball Method: Behaviourally Effective
The snowball method directs all extra payments to the smallest balance first, regardless of interest rate. As each small balance is eliminated, the freed-up payment rolls into the next-smallest balance - creating growing momentum. Research in behavioural economics consistently shows that many people stick with debt repayment longer when they experience early wins. The psychological reward of paying off a small balance can sustain motivation through a multi-year process.
How to Choose
The mathematically correct answer is avalanche - if you can sustain it. Consider avalanche if you're highly disciplined, the interest rate differential between your debts is large, or your smallest debts happen to be your highest-rate debts. Consider snowball if you've started repayment plans before and abandoned them, you have several small balances that could be eliminated quickly, or visible progress matters more to you than optimization.
A Hybrid Approach
Many financial planners suggest starting with snowball to build momentum - eliminating one or two small balances quickly - then switching to avalanche for the remaining larger, higher-rate debts. You get the psychological boost of early wins plus the mathematical efficiency of targeting high-rate balances. The best debt repayment strategy is ultimately the one you'll follow through to completion. Integrating debt repayment into a broader financial plan is an important step. Our cash flow management post covers how to think about the whole picture.
Common Questions
Answers to the questions people actually ask.
How much do I need to retire in Canada?
Should I take CPP early or defer it?
What is the best withdrawal order in retirement?
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Key Takeaway
Mathematically, the avalanche method minimizes total interest paid. Behaviourally, the snowball method wins because early progress keeps you motivated. Choose the approach that fits your psychology, not just the spreadsheet.