The two methods
Both methods start the same way: you pay the minimum on every debt. What differs is what you do with the “extra” payment beyond the minimums. Avalanche throws it at the debt with the highest APR. Snowball throws it at the smallest balance, regardless of rate.
Why avalanche always wins on math
Each dollar of extra payment retires future interest. The highest-APR debt costs the most per dollar of balance, so retiring its dollars first eliminates the most interest. When APR variance is wide — a 19.99% credit card next to a 6% car loan — avalanche can save hundreds to thousands of dollars over the payoff window.
Why snowball sometimes wins on behaviour
Brown & Lahey’s 2015 paper in the Journal of Marketing Research, replicating Gal & McShane (2012), tracked real consumer debt accounts and found that customers who started with the smallest balance were significantly more likely to remain debt-free afterward. The early win — “one debt down, four to go” — appears to reinforce the habit. If you have tried avalanche before and lapsed, snowball may be the better fit.
Canadian context: what counts as “high APR”
- Credit cards — 19.99–24.99% standard, 22.99–29.99% on retail co-brand cards.
- Unsecured line of credit — 8–15% depending on credit profile.
- Secured (HELOC) line of credit — prime + 0.5–1% (currently ~6–7%).
- Vehicle loan — 5–8% new, 7–12% used.
- Student loan (Canada Student Loan) — currently prime, was prime + 0% as of November 2022.
- Mortgage — 4.5–6.5% currently, depending on term and provider.
Talk to a non-profit credit counsellor for free
Credit Counselling Canada (creditcounsellingcanada.ca) maintains a directory of accredited not-for-profit credit counselling agencies across the country. They are free, regulated by provincial consumer protection authorities, and can negotiate Debt Management Programs that reduce interest rates and consolidate payments. Avoid for-profit “debt settlement” companies that advertise aggressively — most of their products do more harm than good per the FCAC and Better Business Bureau.