Question 14
When deciding how to allocate extra cash toward multiple debts, psychology and math often point in different directions. The avalanche method (highest APR first) minimizes total interest cost, while the snowball method (smallest balance first) creates quick wins and momentum that many people find motivating. Behavioral finance research shows that sustaining a plan is often as important as choosing the mathematically optimal route; if you’re chronically discouraged by slow progress, paying off a small balance to build momentum may improve the likelihood you’ll stick with the plan and ultimately become debt-free. The question below asks which method is commonly recommended when motivation and maintaining momentum are the primary goals.
If staying motivated is your top priority, which repayment method is usually recommended?
Did You Also Know...
By Wise Wallet
APR reports interest without compounding, while APY includes compounding — so APY will usually look larger.