Both methods pay the minimum on every debt and aim your extra money at one debt at a time. The only difference is which debt gets it first.
Written by Alex BPublished 14 November 2026
Money Detective is built around practical household money tools for Australians.
The debt snowball puts your extra money on the smallest balance first. The debt avalanche puts it on the highest interest rate first. Avalanche usually costs less interest, and snowball clears whole debts sooner. In the invented example below, four debts totalling $20,600 with $100 extra a fortnight, avalanche costs $155.77 less in interest and finishes a month earlier. Moneysmart lists both approaches for people with more than one card, so neither is a wrong choice. This guide shows how each works with real arithmetic, and the calculator lets you test your own debts.
The appeal is early progress. The first debt disappears sooner, and that can make it easier to keep going. The cost is that a larger debt with a higher rate keeps charging interest while you wait.
Each dollar goes where it avoids the most interest, so the total cost is usually lower. The first debt can take longer to clear, especially if the highest rate is on a large balance.
| Debt | Balance | Interest rate | Minimum a month |
|---|---|---|---|
| Store card | $1,200 | 22.49% | $45 |
| Credit card | $6,500 | 19.99% | $195 |
| Personal loan | $3,100 | 12.99% | $110 |
| Car loan | $9,800 | 8.99% | $320 |
| Total | $20,600 | $670 |
The maths for month one: interest on a debt is balance × yearly rate ÷ 12, so the store card is $1,200 × 22.49% ÷ 12 = $22.49 and the credit card is $6,500 × 19.99% ÷ 12 = $108.28. The extra money is $100 × 26 ÷ 12 = $216.67 a month, because a year has 26 fortnights and 12 months. The calculator above repeats this every month until every balance is zero.
| Method | Months to clear | Total interest | Total repaid |
|---|---|---|---|
| Avalanche | 27 | $3,212.28 | $23,812.28 |
| Snowball | 28 | $3,368.05 | $23,968.05 |
| Minimums only | 50 | $5,535.58 | $26,135.58 |
| Order cleared | Avalanche | Snowball |
|---|---|---|
| 1 | Store card (month 5) | Store card (month 5) |
| 2 | Credit card (month 20) | Personal loan (month 13) |
| 3 | Personal loan (month 23) | Credit card (month 23) |
| 4 | Car loan (month 27) | Car loan (month 28) |
Avalanche saves $155.77 over snowball on these figures, and both save a lot against minimums only: avalanche is $2,323.30 cheaper and 23 months faster. Snowball clears a second debt in month 13, while avalanche does not clear its second until month 20. Those are the trade-offs in real numbers. Rates and balances are made up, and a real lender's fees, rate changes and repayment dates will move the result.
When the interest rates are far apart, avalanche usually wins on cost. When the rates are close, the gap shrinks and the order matters less. Moneysmart's guidance for more than one credit card is to keep paying each minimum, then put extra money on the highest-interest card to save the most interest, or on the smallest balance if quicker progress would help you stay motivated. That is the same choice, in plain terms.
The method you will actually stick with is worth more than the one that looks best on paper, because both only work if the extra payment keeps happening.
The extra amount has to come from somewhere. Work out what is left after your bills in one pay, as the how to budget fortnightly guide shows, then decide how much goes to debt and how much to a small buffer. A buffer matters because one surprise bill with no savings behind it usually goes on the card you are trying to clear. The emergency fund guide and the guide to saving each pay cover that balance.
A repayment plan cannot fix a payment that is already out of reach, and talking to someone sooner usually helps. Financial counselling in Australia is free. The National Debt Helpline is on 1800 007 007, Monday to Friday, 9:30am to 4:30pm, and Moneysmart explains how to get help if you are struggling with a card.
The Free Fortnightly Budget is an Excel template for working out what is left each pay, which is the number that becomes your extra payment.
A done-for-you shortcut: the Debt Payoff Planner is an Excel workbook (.xlsx) for up to eight debts. It projects your estimated debt-free date and total interest month by month, then compares avalanche, snowball and minimums only on the same debts and the same extra payment. It is $12.95 one-off, with no bank login. Debts with a partner share? See the couples budget guide.
Avalanche usually costs less in interest, and snowball clears single debts sooner. Which is better for you depends on how far apart your interest rates are and what keeps you paying. The calculator shows the difference for your own debts.
Yes. Both methods pay every minimum on time. Only the extra money is aimed at one debt.
Many people keep a small buffer so surprise costs do not go back on the card, then put the rest towards debt. How big the buffer is depends on your situation.
This article provides general information only. It does not take into account your personal objectives, financial situation or needs, and it is not financial advice. Examples use invented figures. Money Detective's tools provide estimates and planning information. Consider your own circumstances, and seek independent advice if you need it, before making financial decisions.