How to Snowflake Your Debt

Profile photo of Bev O'Shea
Written by Bev O'Shea
personal finance writer
Profile photo of Kathy Hinson
Edited by Kathy Hinson
Lead Assigning Editor
Fact Checked

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.


A debt snowflake is a way of paying off debt that immediately captures small savings for use toward outstanding bills.

It sounds a lot like other strategies that aim to speed the arrival of your debt-free date, but it's different:

  • In a debt snowball, you aim any extra money at the smallest debt first because it will be the fastest to zero out. The psychological boost from wiping out that first debt can keep you going as you redirect that payment toward the next-smallest debt.

  • In a debt avalanche, you go after the highest-interest debt first, which can decrease the total interest you pay. It may be less rewarding in the short term, if it takes longer to get that first victory, but more efficient.

In both of those strategies, you are using money you have especially budgeted for debt payoff.

The snowflake method, on the other hand, finds tiny, day-to-day savings and uses them to make your zero-debt day come even sooner. It's compatible with either the snowball or avalanche strategies. Like snowflakes, tiny savings collected over time can have a big impact. And you have to be quick to capture them: Snowflakes disappear fast.

Where to find money to pay off debt

If you’ve budgeted carefully, you may think there are no more savings to be had.

But the small amounts of money you can snowflake toward debt (or an emergency fund) can come from less obvious sources like:

  • Splitting a 12-inch sub with a friend when you would have otherwise ordered your own 6-inch sub (potential savings: about $2!).

  • Discovering a $20 bill in a coat pocket (and before you take clothes to the cleaners or donate them, please check all the pockets).

  • An unexpected rebate check in the mail.

  • A yard sale.

  • Payment for jobs that are outside your normal budget (lawn mowing, baby-sitting, pet care, housesitting and other ways to make money).

  • A rebate from a cash-back app.

You get the idea. We are not talking about big amounts of money here.

Nor are we talking about money accounted for in your budget; this is found money only. And you don’t want to divert the money you have allotted for your own discretionary spending — your budget won’t work without it.

The idea is to benefit from these small cash surprises instead of letting them slip through your fingers, without even the tiniest contribution toward your financial goals such as consolidating and paying off credit card debt.

How to use those little bits of cash

How do you manage to keep such small savings from simply disappearing?

  • If you keep a change jar, you can put the extra savings there and use that money to help pay down debt at the end of the month. The important thing is to make sure it’s not in your pocket or wallet, available to spend. If you’re depositing cash, be sure the bank’s locations are convenient to you.

  • If it’s money unspent in your bank account, some banks or credit unions may allow you to transfer even tiny amounts from checking to savings. (The last thing you want to do is to accidentally trigger a fee for excessive transfers — and many financial institutions have them — because you moved $3.21 from checking to savings.) Otherwise you can try grouping the tiny transfers together, say, once a week, or write a check to yourself.

  • If you are using snowflakes to make a loan disappear early, be sure that extra payments are acceptable to the lender and that you can have the extra cash applied toward principal.

  • If you are making “micropayments” on credit cards, be sure you won’t incur charges on either end of the transaction.

Get more financial clarity with NerdWallet
Monitor your credit, track your spending and see all of your finances together in a single place.
Find and move all your old 401(k)s — for free.
401(k)s left behind often get lost, forgotten, or depleted by high fees. Capitalize will move them into one IRA you control.
start consolidating

on Capitalize's website