Debt Snowball Method vs High Interest First

Which Method is Better to Get out of Debt?

There are various debt clearance methods.

Two of the most popular are the debt snowball and high interest first repayment patterns.

In this guide to the debt snowball method vs high interest first, we’ll look at each option in detail to help you decide which is best for you.

If you find yourself in debt, you may be thinking about how you’re going to start paying bills and reducing your outstanding balance.

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There is a vast amount of information available online, but often, you stumble across articles that support different techniques, which can be confusing.

In some cases, there is no clear right or wrong answer, and the best course of action will depend on the individual’s circumstances and the level of debt.

In this guide, we’ll look at the snowball and high interest first methods in detail, weighing up the pros and cons and offering advice to help you make a well-informed decision.

It’s crucial to remember that there is help out there if you are in debt and you’re worried about how you’re ever going to pay it off.

The debt snowball method

The debt snowball method was proposed by Dave Ramsey and it is characterised by paying off your smallest debts first.

You may also see this kind of repayment system referred to as debt stacking.

With the snowball concept, you organise your debts according to the value, tackling each one in order of size, starting with the smallest amount.

The idea behind this means of clearing debt is that you gather momentum as you move through your list of debts to pay off.

There are significant psychological benefits to wiping off individual debts and feeling like you’re achieving goals on a regular basis.

If you embrace this method, you’ll pay the minimum fee on all your debts, while focusing on the smallest debt and putting more money into bringing the value down.

Once you’ve paid off the debt at the top of the list, you move to the next and keep going until you’re debt-free.

Dave Ramsey estimates that over 5 million people in the world have now used the snowball method to clear debts, but will it work for you?

This system is relatively simple, and it involves three key steps:


  1. Write down all your debts: list every outstanding non-mortgage debt you have along with the amount, the frequency of payments and the minimum payment charge. It is critical to include as much information as possible at this stage so that you know how to plan your payments.
  2. Calculate how much you can afford to spend on clearing debts per month. It’s a good idea to use a budgeting app or a spreadsheet to determine how much income you can devote to debt payments.
  3. Start paying your smallest debt off, ensuring that you meet the minimum payments for all your other debts.


High interest first

The snowball debt method is often pitted against the high interest first system.

Some people refer to this as the debt avalanche.

If you opt to follow this route, you’ll prioritise your debts according to the interest rate, rather than the value.

This means that you’ll pay off the debts with the highest interest rate first, gradually working your way down to the debts that have lower interest fees.

The goal is to minimise interest charges while clearing debt.

The high interest first method also involves 3 simple steps:


  1. List all your non-mortgage debts, the total value, the minimum payment and the interest rate.
  2. Start paying off the debt with the highest interest fee, while paying the minimum payment for all other debts on your list.
  3. Pay off the first debt and then move on to the debt with the second-highest interest rate.


Debt snowball vs high interest first: Which method is best?

Like everything in life, there are pros and cons of both the snowball and the high interest first methods.

Both systems have the same end goal, and they both encourage individuals to work towards a more stable financial future and to get out of debt for good.

If you analyse real-life examples of debt snowball and high interest first payments, you will find that in most cases, the high interest first method reduces the total amount and it may be slightly faster.

The snowball method incurs extra interest charges and it may be a little slower.

On the surface, if you’re reading this, you might assume that the high interest first method is better.

On paper, this might be the case, but in practice, there are reasons to support the snowball method, most notably, being able to cross debts off regularly and to reap the rewards of watching balances dwindle and enjoy the satisfaction of wiping your debts off periodically.

Many people benefit from the psychological boost of feeling like they are in control, and this system can be more accessible than the high interest first method for this reason.

With a debt avalanche, it takes time to see results, and this can test motivation and commitment.

A study published in the Harvard Business Review suggested that paying off the smallest debt first was more effective because people were more inclined to stick to the schedule and more driven to keep working through the repayment program.

When you’re in debt, it’s understandable to gravitate towards a simple set of instructions that will guide you through the process of paying outstanding balances and reduce stress.

Which option is best for me?

It is tricky to answer the question ‘Which option is best?’ without understanding the situation individuals face.

When it comes to managing debt, there isn’t a universal solution or a miracle cure.

To answer this particular question, it’s important to analyse your finances, assess the level of debt and think about how you would prefer to go about paying off your debts.

Some people find it easier to commit to structured payments than others, and some may be more focused on paying as little interest as possible.

The scale of debt will play a role when it comes to deciding which approach to adopt.

If you have substantial debts, for example, over $50,000, you may find that it’s more difficult to follow the high interest first method, but that it saves you a lot of money.

This will almost certainly be the case if you’re using credit cards with high interest fees or you’ve taken out a short-term loan with a high interest rate.

If you stick with minimum repayments, and you’re paying off smaller debts first, you’ll continue incurring significant interest charges and it’ll take you longer to feel like you’re getting somewhere.

There is also the advantage of reducing the risk of your debt growing exponentially if you are unable to stick with the repayment schedule.

If you are paying a lot in interest, it is worth doing some research to see if you could bring down your interest payments, for example, by doing a balance transfer on your credit card.

For lower levels of debt, it may be best to use the snowball method, especially if you’re keen to see results fast.

If you are unsure of how the figures will stack up, you can use online debt snowball and high interest first calculators.

If the difference comes out at a few hundred dollars, it’s a good idea to choose the system that appeals to you most and to go for the option you feel you could stick to.

Dealing with debt in Canada

Statistics show that Canadian households are using almost 15% of their household income to satisfy debt obligations.

If you’re in debt, taking swift action is the best way to manage your money and prevent debt from spiralling out of control.

If you’re borrowing money, you’re surviving on credit, or you’re struggling to pay bills, it’s very easy to lose control.

Debts can rise rapidly, and you might feel like there is no way out.

Forty percent of Canadian adults fear that they will never be debt-free.

The good news is that there are solutions.

Whether you owe $5,000 or more than $50,000, there is help available.

If you’re dealing with debt in Canada, and you have questions or concerns, our friendly, experienced team is on hand to provide information and advice.

We can explore different debt repayment methods and approaches with you, highlighting the pros and cons and figuring out the most effective ways to get out of debt.


There are advantages and disadvantages of both the snowball and high interest first debt repayment methods.

The best option comes down to the individual and their circumstances and preferences.

While tackling high interest debts first may produce results faster and lower the total amount, many people prefer to cross off smaller milestones and gather momentum and motivation as they go.

If you’re in debt, and you’re wondering which route to go down, we can help you make a decision, providing tailored advice based on your financial situation.

Contact us today to find out more.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
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What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
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Canadian Bankruptcies

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Bankruptcy FAQs
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How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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