If you owe money on several accounts, deciding which to pay first can feel confusing. Two well-known methods give you a clear order: the debt snowball and the debt avalanche. Both start the same way, and both can work. The difference lies in what they prioritise.
The common starting point
List every debt with its balance, interest rate and minimum payment. Pay the minimum on all of them to stay in good standing. Then put every extra unit of money you can find toward one chosen debt.
The snowball method
Order your debts from the smallest balance to the largest, and attack the smallest first. When it is cleared, roll its payment into the next one. Each win is quick and visible, which can boost motivation. The trade-off is that you may pay more total interest if a larger debt carries a higher rate.
The avalanche method
Order your debts from the highest interest rate to the lowest. Focus extra money on the most expensive debt first. Mathematically this usually costs the least interest and can shorten the payoff time. The trade-off is that the first goal may take longer to reach, which can test patience.
A worked example
Suppose you have three debts and 300 extra per month beyond minimums.
| Debt | Balance | Rate |
|---|---|---|
| Store card | 600 | 18% |
| Credit card | 3,000 | 24% |
| Personal loan | 5,000 | 10% |
With the snowball, you target the store card first, then the credit card, then the loan. With the avalanche, you target the credit card first at 24 percent, then the store card, then the loan. The avalanche usually saves more interest here, while the snowball clears one account sooner.
How to choose
- Choose the avalanche if you are motivated by the numbers and want the lowest total cost.
- Choose the snowball if you need early wins to stay on track.
- A hybrid is fine: clear one tiny balance for momentum, then switch to the highest rate.
Other helpful steps
Stop adding new debt while you repay. Ask lenders whether a lower rate or a consolidation option is available, but check fees and the full cost first. Keep a small emergency buffer so a surprise bill does not push you back onto credit.
The best method is the one you will stick with until the last balance is gone.
