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Debt snowball vs debt avalanche

Both methods work the same way. You pay the minimum on every debt and put every spare euro, pound or dollar on one target debt. When it is cleared, its payment rolls onto the next one. The only difference is the order.

Snowball: smallest balance first

You clear small debts quickly, which feels good and frees up payments early. Research on consumer behaviour suggests these quick wins help people stick with it.

Avalanche: highest interest rate first

Mathematically this always costs the same or less in total interest, and it is usually faster, because the most expensive money goes first.

Example

Here both methods start with the store card. The snowball then targets the credit card, and so does the avalanche, so they are identical. The methods only differ when a small debt has a low rate. In that case the avalanche saves money and the snowball gives you an earlier win.

How to choose

• If you've started and stopped before, use the snowball.
• If you are disciplined and the interest-rate gap is big, use the avalanche.
• Either is far better than spreading extra payments evenly.

Before you start

Keep a small emergency fund so one surprise bill doesn't go back on the card. If you are struggling with repayments, free help is available: MABS in Ireland, MoneyHelper or StepChange in the UK.

Not financial advice. These guides are general information for budgeting and planning, not financial, tax, legal or mortgage advice. Rules change and your situation is unique. Check official sources or a qualified adviser before you act.