JagInsights › Glossary › Debt snowball
What is the debt snowball method?
The debt snowball pays the smallest balance first. How it works, and when the avalanche costs less interest.
The debt snowball is a payoff order: pay the required minimum on every debt, then send every extra dollar to the smallest balance. When that one is gone, send that whole payment to the next-smallest.
Worked example
Three cards: $400, $1,800, and $3,200. Extra $100 a month goes to the $400 card until it is gone, then that payment plus the $100 hits the $1,800 card. The interest rate is ignored on purpose. The win is a closed account.
Why it matters
Some people quit avalanche because the biggest-rate card barely moves. Snowball trades extra interest for a visible finish.
Questions people ask
Is snowball the cheapest method?
Usually no. Avalanche, which attacks the highest APR first, usually costs less interest. Snowball is for people who need a closed account to keep going.
Do I still pay minimums on the other cards?
Yes. Missing a minimum is a late payment. The extra cash is on top of minimums.
Can I mix the two?
Yes. Close a small card for the win, then switch to the highest APR.
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