The debt snowball is a debt-payoff strategy in which you order your debts from smallest balance to largest, make minimum payments on all of them, and throw every spare dollar at the smallest one. When it is cleared, you roll its payment into the next-smallest debt. The method prioritises quick wins and motivation over minimising total interest.
Worked example
You owe three debts: 500 at 18%, 2,000 at 12%, and 5,000 at 9%. You pay all minimums plus 200 extra on the 500 debt. It clears in about 3 months; that payment (minimum + 200) then rolls onto the 2,000 debt, and once that clears, the entire combined sum attacks the 5,000 debt — each payoff accelerates the next.
Why it matters
The debt snowball works because behaviour, not just math, drives debt repayment: clearing a whole balance early delivers a motivating win that keeps people on track. The pitfall is cost — by ignoring interest rates, you may pay more total interest than the avalanche method, which targets the highest-rate debt first.
Frequently asked questions
The snowball pays off the smallest balance first for psychological momentum, while the avalanche pays off the highest interest rate first to minimise total interest. The avalanche is mathematically cheaper; the snowball is often easier to stick with.
No. Paying down balances and making consistent on-time payments generally helps your credit over time. The order in which you tackle debts does not directly affect your score.