Debt Payoff Methods: Snowball vs Avalanche

Debt Payoff Methods: Snowball vs Avalanche

6 second take: When facing debt, it can be difficult to navigate how to best pay down what you owe. Here are two tried and tested methods.

If you’ve ever taken out a loan, you know that it can be tough to come up with a plan to repay your debts. Given that the average American owes over $90,000 in individual debt according to a study by Experian, it’s more important than ever to ensure that you have a payment plan in place.

Individuals often compare the snowball vs the avalanche methods of tackling debt. Though some people might prefer the snowball to the avalanche, both have pros and cons, and both can help get you on the path of repayment.

Here is a quick guide to compare the snowball vs the avalanche methods of debt repayment.

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* Applications submitted may be funded by one of several lenders including First Electronics Bank, a Utah-chartered bank, Member FDIC; Coastal Community Bank, Member FDIC; and LendingPoint, a licensed lender in certain states. Loan approval is not guaranteed. Minimum loan amounts apply in Georgia, $3,500; Colorado, $3,001; and Hawaii, $1,500. Upon final underwriting approval to fund a loan, said funds are often available the next non-holiday business day. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary. Loans are offered from $500 to $10,000 (loan amount maximum based on MCC codes), at rates ranging from 7.99% to 35.99% APR, with terms from 24 to 48 months. For example, for a well-qualified customer, a $5,000 purchase will have a 90-day promotional period with no interest, a 3% fee, and $100 monthly payments. After the promotional period, a remaining balance will be a 24-month term loan, and $263.72 monthly payments with an overall APR of 26.54%.

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