Snowball or avalanche: which order to clear debts in
The short answer
The avalanche means paying off the highest interest rate first. It always costs the least in interest.
The snowball means paying off the smallest balance first. It costs slightly more, but clears a debt sooner and is easier to stick with.
The better method is the one you will actually keep doing. The difference in interest is often smaller than people assume, and an abandoned plan costs far more than a slightly suboptimal one.
What the two methods actually are
Both assume you pay the minimum on every debt, then put whatever you can spare towards one of them specifically. They differ only in which one you choose.
| Method | What you target | What it gives you |
|---|---|---|
| Avalanche | The debt with the highest interest rate, regardless of size | The lowest total interest. Mathematically it always wins on cost. |
| Snowball | The smallest balance, regardless of rate | A debt cleared sooner, and visible progress early on. |
In both cases, when a debt clears, its payment does not get absorbed into ordinary spending. It moves onto the next debt in the queue, which is why the later debts disappear much faster than the first. That rolling effect is the engine of both methods and it is what makes either of them work.
Compare them on your numbers Debt repayment calculatorEnter your actual debts and switch between the two orders to see the difference in interest and time for your situation specifically.
How much difference does it really make?
Less than the arguments about it would suggest, in most ordinary cases. Where rates are broadly similar across your debts, the two methods often finish within a month or two of each other and the interest difference can be modest.
The gap widens when one debt has a much higher rate than the others, or when the highest-rate debt also happens to be the largest. In that situation the avalanche can save a meaningful amount, and it is worth the patience.
The only way to know which case you are in is to run your own figures. A general answer cannot tell you, because it depends entirely on the spread of rates and balances you happen to have.
The honest case for the snowball
The avalanche wins on arithmetic every time. Despite that, the snowball is often the better recommendation, and it is worth being clear about why rather than treating it as a concession to weak willpower.
A repayment plan only saves you money if you keep doing it. Clearing an entire debt, seeing one fewer statement arrive, and having a payment freed up early gives you evidence that the plan is working. Several months of grinding away at a large balance with nothing visibly changing is where plans get abandoned, and an abandoned avalanche costs far more than a completed snowball.
If you have tried before and stopped, that is genuinely useful information about which method suits you, not a character flaw.
What matters more than the order
Choosing between the two is a smaller decision than any of the following.
- How much you can put towards it. Increasing the extra payment changes the outcome far more than reordering the queue ever will.
- Priority debts come first. Rent, mortgage, council tax, energy bills and court fines carry consequences that credit cards do not, including losing your home. These are dealt with before any interest optimisation.
- Promotional rates ending. A 0% card that reverts to a high rate in three months should be treated as the high rate, not the 0%.
- Balance transfers. Moving expensive debt to a 0% deal can save more than either method, though transfer fees and your credit file both affect whether it is available and worthwhile.
- Not adding to the pile. A repayment plan running alongside continued borrowing does not go anywhere, and this is the most common reason plans fail.
If the numbers do not work at all
Everything above assumes there is spare money after the minimum payments. If there is not, no repayment order fixes that, and it is not a failure of planning or discipline.
This is a far more common position than people realise, and there are options that no calculator can model: reduced payment arrangements, Breathing Space, debt relief orders and other formal solutions, depending on your circumstances. Advisers arrange these routinely.
Free, confidential and non-judgemental advice is available from StepChange, National Debtline on 0808 808 4000, and Citizens Advice. None of them charge. Companies that charge for the same service exist, so it is worth going to the free ones first.
It also helps to know that debt more often arrives through illness, redundancy, relationship breakdown or rising bills than through overspending. The advisers who deal with this every day are not surprised by anything, and speaking to them earlier opens up more options than waiting does.
Getting started
Whichever method you choose, the first step is the same and it is the one people put off: write down every debt with its balance, its interest rate and its minimum payment. Most people find the total is different from what they assumed, in one direction or the other.
Once it is written down, the choice between methods usually becomes obvious, because you can see whether the rates are similar or whether one debt is clearly the expensive one.
Find the spare money first Monthly budget calculatorWork out realistically what you have available each month before deciding where to put it.