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Self. Inc: What is the Snowball Strategy for Paying Off Debt?

August 22, 2019

The article by consumer finance startup Self. Inc cited our work as follows:

Research backs the snowball repayment strategy

Research has also touted the snowball strategy as an effective way of paying down debt.

A study in the Journal of Consumer Research [2] used anonymous financial data from a period of 36 months to examine how 6,000 debtors paid off their balances. The study concluded that prioritizing one debt over another was more effective than paying a little bit over all debts. In fact, these individuals paid off their debt 15% faster than those making minimum payments.

The research noted the impact was less about math and more about the debtor’s ability to feel a sense of progress [3] along the way. As they saw one balance go down quickly and then disappear, it motivated them to continue to make progress. It helped relieve the sense of overwhelm that people feel around debt management.


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