Best Debt Payoff Strategies in Canada (Snowball vs Avalanche)
Debt can feel overwhelming — but with the right strategy, you can pay it off faster and save thousands in interest. This guide explains the most effective debt payoff methods used by Canadians today.
Understanding Your Debt
Before choosing a payoff strategy, list all your debts including:
- Credit cards (usually highest interest)
- Personal loans
- Car loans
- Lines of credit
- Student loans
Enter your numbers into the Debt Payoff Calculator to get a complete payoff projection.
Debt Snowball Method
The Debt Snowball focuses on paying off the smallest balance first — regardless of interest rate. This creates motivation and momentum.
How It Works
- List debts from smallest to largest balance
- Make minimum payments on all debts
- Pay extra on the smallest debt
- Once paid off, roll its payment into the next debt
Best For:
People who need quick wins and strong motivation.
Example
| Debt | Balance | Interest Rate |
|---|---|---|
| Credit Card A | $1,200 | 19.99% |
| Credit Card B | $3,000 | 22% |
| Car Loan | $12,000 | 7% |
The Snowball method pays off the $1,200 balance first — giving a fast psychological win.
Debt Avalanche Method
The Debt Avalanche tackles the highest-interest debt first. This method saves the most money in interest.
How It Works
- List debts from highest to lowest interest rate
- Make minimum payments on all debts
- Put extra payments toward the highest-interest debt
Best For:
People who want to save the most money overall.
Example
In the example above, the Avalanche would target the 22% credit card first.
To compare both strategies instantly, use the Debt Payoff Calculator.
Debt Consolidation (Loan or Line of Credit)
Consolidation means combining multiple debts into one lower-interest loan. This often reduces your:
- Monthly payment
- Total interest paid
- Stress from managing multiple bills
Estimate new payments using the Loan Calculator.
Balance Transfer Strategy
Some Canadian banks offer low or 0% balance transfer promotions for 6–12 months. This allows you to pay down debt without accumulating high interest.
Make Extra Payments When Possible
Even adding $25–$100 extra per month dramatically reduces your payoff time. See how much faster your debt disappears with the Debt Payoff Calculator.
Example: $5,000 Debt at 19.99%
| Monthly Payment | Months to Pay Off | Total Interest |
|---|---|---|
| $100 | ≈ 79 months | ≈ $3,247 |
| $200 | ≈ 32 months | ≈ $862 |
Try your own numbers here: Debt Payoff Calculator.
Create a Canadian Budget for Faster Payoff
A simple budget helps allocate more money toward debt. Most Canadians use:
- 70/20/10 rule (70% needs, 20% savings, 10% debt)
- 50/30/20 rule (needs, wants, debt/savings)
FAQ: Paying Off Debt Faster in Canada
What is the fastest way to pay off debt?
Avalanche method if you want to save money; Snowball method if you want motivation.
Should I invest or pay off debt?
High-interest debt (e.g., 19–29% credit cards) should be paid off before investing. See our Credit Card Calculator.
Can consolidation hurt my credit?
It may temporarily lower your score but helps long-term if debt is paid down on time.
Should I use my savings to pay off debt?
It depends — generally yes for high-interest debt, but keep an emergency fund.
Related Tools
- Debt Payoff Calculator
- Loan Calculator
- Credit Card Interest Calculator
- Savings Calculator
- More financial guides
Final Thoughts
Debt does not have to control your life. Whether you choose the Snowball or Avalanche method, the key is consistency. Combine smart repayment strategies with the tools on LoanCalc.ca to take control of your finances and become debt-free faster.