When you have multiple debts, deciding which to pay off first matters. The two most widely discussed approaches are the debt snowball and the debt avalanche. Both work — but they suit different people and situations.
The debt snowball method
With the snowball method, you focus all extra payments on the debt with the smallest balance first, while making minimum payments on all others. When the smallest debt is paid off, you add that payment to the next smallest. The total you pay each month stays the same, but it shifts towards the next target.
The snowball works on psychology: seeing a debt fully cleared motivates you to keep going. Research suggests this approach leads to better follow-through for many people, even though it is not mathematically optimal.
The debt avalanche method
With the avalanche, you focus extra payments on the debt with the highest interest rate first, regardless of balance. This is mathematically optimal: you pay less in total interest over time compared to the snowball.
The avalanche requires patience. If your highest-rate debt also has a large balance, it may take months or years before you see it cleared. This can feel discouraging — but the financial outcome is better.
Which should you choose?
- If you are motivated by quick wins and find it hard to stay on track, try the snowball
- If you want to minimise total interest paid and can stay motivated through a longer process, use the avalanche
- If one of your debts is causing anxiety or stress — like a payday loan — clearing it first regardless of method can be worth it for your mental health
- If your interest rates are similar across debts, the snowball and avalanche will produce similar results
What both methods have in common
Both approaches only work with a fixed extra monthly repayment above the minimums. You need a budget that creates this surplus. If you do not currently have spare money to put towards debt, addressing that comes first.
General guidance only — not regulated financial advice.