In personal finance, the debt-repayment method that targets the smallest balance first is called the debt snowball method.
Under the debt snowball method, a person makes required minimum payments on all debts and directs extra money toward the debt with the smallest outstanding balance. After that balance is cleared, the freed payment is added to the next-smallest balance. The process repeats, causing the amount directed at later debts to grow like a snowball.
The method became widely known through personal-finance writing, including Dave Ramsey’s popular description of it. Its main appeal is psychological: paying off small balances can create visible milestones and motivation. It does not necessarily minimize total interest.
The debt avalanche method instead directs extra money toward the debt with the highest interest rate, which can reduce interest cost when other factors are comparable. Neither method removes the need to keep required payments current, and fees or changing rates can affect results.