Holiday Debt: Snowball or Avalanche?

Snowball pays off your smallest balance first. Avalanche pays off the highest interest rate first. In both, you pay the minimum on every card and put any extra toward one target. Avalanche usually saves more interest; snowball gives you a win sooner.

Here’s what that looks like with real numbers.

The example: $5,600 of holiday debt

Three cards after December, with $300 a month to put toward them in total:

Card	Balance	Interest rate (APR)	Minimum
Card A	$600	18%	$25
Card B	$1,800	29.99%	$45
Card C	$3,200	22%	$80

Each month: pay all three minimums ($150), then put the remaining $150 on the target card. When a card is paid off, its money rolls to the next target.

Snowball: smallest balance first (A → B → C)

	Result
First card paid off	Card A in month 4
Debt-free	Month 24
Total interest paid	about $1,460

Avalanche: highest rate first (B → C → A)

	Result
First card paid off	Card B in month 11
Debt-free	Month 24
Total interest paid	about $1,381

The difference: avalanche saves about $79 in this example, but the first “win” takes 11 months instead of 4. With bigger balances or bigger rate gaps, the difference grows.

Simplified example: interest calculated monthly at APR ÷ 12, fixed minimums, no new purchases or fees. Your card’s statement will differ.

Which one should you pick?

• Pick avalanche if you’re motivated by numbers and can stay patient for the first payoff.
• Pick snowball if you’ve tried before and lost steam. Clearing a card in a few months can keep you going.
• Mix them: pay off one tiny balance first for a quick win, then switch to avalanche.

Before you start: 4 quick steps

1. List every debt with balance, rate and minimum. Your free credit reports (AnnualCreditReport.com in the US) can help you find all of them.
2. Stop adding to the cards. Pausing the cards while you pay them down matters more than which method you pick.
3. Find the extra money: a no spend January, a subscription audit, or selling unused gifts.
4. Keep a small cushion so the next surprise doesn’t land on a card — see emergency fund on a low income.

Getting help

If minimum payments are already hard to make, talk to someone before it gets worse. In the US, nonprofit credit counseling agencies (look for NFCC members) offer free or low-cost help; the CFPB explains your rights with credit cards and debt collectors. In Australia, the National Debt Helpline (1800 007 007) is free.

General information, not personalized financial advice.

Planning ahead for next December? A Christmas savings plan started in January keeps this from happening again.