Debt Snowball
Also known as: snowball method, smallest balance first
The debt snowball is a repayment strategy that clears your smallest balance first, then rolls that freed-up payment onto the next-smallest debt.
Under the snowball method you pay the minimum on every debt, then direct all spare money at the smallest outstanding balance regardless of its interest rate. When that debt clears, its minimum payment does not return to general spending — it joins the pot attacking the next-smallest balance, and the payment grows each time a debt disappears.
The rationale is behavioural rather than mathematical. Clearing a debt entirely produces a visible, complete win, and the number of separate debts you are juggling falls quickly. For people who have abandoned repayment plans before, that early momentum is often what keeps them going.
The cost of that momentum is interest. Because the strategy ignores rates, a high-rate credit card can sit accruing at 36% or more while spare cash retires a small, cheap loan. Over a multi-year payoff this usually costs more than the avalanche method would have.
Note that the snowball and avalanche coincide whenever your dearest debt also happens to be your smallest — a common situation when the debt in question is a credit card. When the two strategies produce the same order, the choice is irrelevant and you should simply start.