How the Debt Snowball Method Helps You Repay Your Loans

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

debt snowball method

Sometimes, paying off debt requires a mental boost. That’s why some borrowers turn to the debt snowball method to finally get rid of their loans for good.

While other get-out-of-debt strategies can be cheaper — you’d likely pay less in interest charges, for instance, by using the debt avalanche method — the debt snowball method feels better to some people.

“If it was all mathematical, we wouldn’t get into debt in the first place,” said Jeff Proctor, co-founder of the financial advice website DollarSprout.

Proctor would know: A few years after graduating from Virginia Tech with a biochemistry degree, his debt had ballooned to nearly $30,000.

“I had $10,000 in student loans in two different loans, about $1,500 in credit card debt, and $16,000 in car debt,” said Proctor. In just 18 months of using the debt snowball method, he’s paid off his credit cards and brought his student loan balance down to $4,000.

Here’s how this debt repayment strategy works and why so many borrowers are using it successfully.

How does the debt snowball method work?

If you’re able to make extra payments each month, the debt snowball method helps you prioritize which loan to pay off first.

To use this strategy, rank your loans from the smallest to the largest balances. Continue to make the minimum payments on all your accounts, but direct any extra money toward your smallest loan. When that’s fully paid off, begin working on the next lowest balance in line.

In Proctor’s case, he tackled his $1,500 credit card debt first.

“My lowest debt happened to be my credit card debt, which was also the highest interest percentage,” Proctor said. He quickly got rid of that debt by paying about three to five times more than his monthly minimum payment.

“From there I went to the next lowest debt, which was one of my student loan debts,” he said. “I paid a bit extra for a few months [and] then made a lump sum payment of around $3,000 to completely knock it out.”

If you’re considering the debt snowball method, our prepayment calculator can help you determine how much money you’ll save by paying your loans off ahead of schedule.

Pros and cons of using the debt snowball method

“Getting out of debt is as much psychological as it is financial,” said Caden Rhoton, founder of Dime Dad, a financial blog he started to help young parents like himself make smart financial choices. “Once you pay off your small debts, the momentum you start to feel is almost tangible.”

The mental boost people get from consistently eliminating their loans is the biggest advantage to the debt snowball method.

“Getting out of debt can be a long road, and the quick wins experienced by eliminating small loans using the snowball method provide the spark needed to keep going,” Rhoton said.

That’s what made Proctor pick the method for himself. “The debt snowball method is very effective in one area that isn’t quantifiable — human emotions,” said Proctor. “This method is all about instilling the mindset to pay off debt quickly, which of course lends itself to saving you money.”

There is one major drawback to the debt snowball method — mathematically, it’s often not the cheapest way to get out of debt ahead of schedule.

A more cost-effective strategy is the debt avalanche method, under which you tackle the balance with the highest interest rate first. By eliminating your highest-interest loans as quickly as possible, you pay less in total interest charges over time.

But if your highest-interest loan is a large sum, it might take a while to pay it off. That thought isn’t daunting to some borrowers. Knowing you’re saving as much money as possible might be all the motivation you need to stick to your repayment plan.

However, for people like Proctor, opting for a debt repayment strategy they’ll follow through with might be more important. “Personal finance is oftentimes more about human behavior than it is the numbers,” he said.

How else can I save money while repaying my debt?

If neither the debt snowball method nor the avalanche method is appealing, a debt consolidation loan could be another option — it could simplify your payments and offer savings. This is a type of personal loan you can get to pay off and combine all your outstanding debt, leaving you with one new loan to repay.

Consolidating your debt could help you in the following ways:

  • You could qualify for lower rates, so you’d pay less in total interest charges over the life of your new loan.

  • With just one monthly payment to make, you could simplify your finances.

  • A longer repayment plan could qualify you for lower monthly payments, creating more flexibility in your day-to-day budget, though it could increase the total interest you pay.

If you decide debt consolidation is right for you, you can apply for loans online to see if you qualify.

How to know which debt repayment method is right

Picking a method to pay off debt is a personal choice that depends on your monthly budget, savings habits, and financial management outlook.

Ultimately, there’s no right or wrong way — each debt repayment method gets you to the finish line if you follow through with it. What’s important is choosing a strategy to which you can commit in order to finish paying off your debt.

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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal Loans: Fixed rates from 5.950% APR to 14.740% APR (with AutoPay). Variable rates from 5.825% APR to 14.365% APR (with AutoPay). SoFi rate ranges are current as of May 18, 2018, and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.825% APR assumes current 1-month LIBOR rate of 1.90% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 4.99% – 16.24% (4.99% – 16.24% APR) based on applicable terms. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

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Upgrade Bank Disclosures


  • Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.
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4.99% - 29.99%$10,000 - $35,000Visit FreedomPlus
4.99% - 16.24%2$5,000 - $50,000Visit Citizens
15.49% - 34.49%$2,000 - $25,000Visit LendingPoint
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.49% - 18.24%$5,000 - $75,000Visit Earnest
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.