GLOSSARY · DEBT & HOUSING
Debt snowball
A payoff order that pays the minimum on every debt and sends all extra money to the smallest balance first, regardless of interest rate, then rolls that payment to the next-smallest. It usually costs more interest than the avalanche order, but closing accounts early gives visible progress, which research links to a higher chance of finishing.
Also called: snowball method, smallest balance first
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CHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSAvalanche or Snowball: Choosing a Payoff OrderCHAPTER · DEBT ELIMINATION STRATEGIES · STRATEGIESA Debt Payoff RoadmapRELATED TERMS
SOURCES
- Can Small Victories Help Win the War? Evidence from Consumer Debt Management. Gal & McShane, Journal of Marketing Research, 2012.
- Repayment Concentration and Consumer Motivation to Get Out of Debt. Kettle, Trudel, Blouin & Häubl, Journal of Consumer Research, 2016.