The short answer
Both methods work the same way: pay the minimum on every debt, then put every spare amount towards one target debt. When that one is paid off, add its payment to the next target. The payments roll forward and grow, like a snowball.
The difference is the order:
- Debt avalanche: target the highest interest rate first. It saves the most money and usually finishes fastest.
- Debt snowball: target the smallest balance first. You clear debts sooner, which keeps many people motivated.
Either is far better than paying only the minimums.
A worked example
Suppose you owe three debts and can pay 600 a month in total:
| Debt | Balance | Interest rate | Minimum payment |
|---|---|---|---|
| Credit card A | 4,000 | 24% | 120 |
| Store card | 900 | 30% | 40 |
| Personal loan | 6,500 | 11% | 190 |
The minimums total 350, which leaves 250 extra each month.
Avalanche order (highest rate first):
- Store card (30%): pay 40 + 250 = 290 a month. Cleared in about four months.
- Credit card A (24%): its 120 minimum plus the 290 freed up.
- Personal loan (11%): everything goes here last.
Snowball order (smallest balance first):
- Store card (900): the same first target here, because it is both smallest and most expensive.
- Credit card A (4,000).
- Personal loan (6,500).
In this example both methods happen to choose the same order. They differ when a small debt has a low rate and a large debt has a high rate. If the personal loan were the smallest balance, the snowball would pay it first, while the avalanche would keep attacking the 24 percent card, saving interest.
Which saves more money?
The avalanche always costs the same or less interest, because each extra payment goes where it cuts the most interest. The gap depends on how different your rates are:
- Rates close together: the difference is small, so pick whichever motivates you.
- One debt far more expensive (such as a card at 25 to 30 percent next to a loan at 8 percent): the avalanche can save a meaningful amount.
Which keeps you going?
Paying off debt takes months or years, and many plans fail because people give up. The snowball delivers early wins: an account reaches zero quickly, and there is one fewer bill to think about. Some research on consumer behaviour suggests that closing accounts helps people stay motivated, which is why many debt counsellors recommend it.
A useful compromise: start with the avalanche, but if a small balance can be cleared within a month or two, clear it first for the boost.
How to start, step by step
- List every debt with its balance, interest rate and minimum payment.
- Build a small emergency buffer so a surprise bill does not undo your progress. See our emergency fund guide.
- Find your extra amount. A clear budget shows what you can put towards debt each month.
- Choose your order: avalanche (rate) or snowball (balance).
- Automate the minimums so nothing is ever missed. Missed payments add fees and hurt your credit score.
- Send the extra to the target debt every month.
- Roll the payment forward when a debt is cleared.
- Stop adding new debt. Remove saved cards from shopping sites if it helps.
Ways to speed it up
- Ask for a lower rate. Card issuers sometimes reduce rates for customers with a good payment history.
- Balance transfer cards with a 0 percent introductory rate can help, if the transfer fee is reasonable and you can clear the balance before the rate jumps.
- Use windfalls such as bonuses and tax refunds.
- Sell things you no longer use.
High-interest debt grows through compound interest, so every extra payment early on saves more than the same payment later.
Effect on your credit score
Paying down card balances lowers your credit utilisation, which typically improves your score. Keeping old, paid-off cards open (if they have no annual fee) can help too. Our credit score guide explains the factors.
Key takeaways
- Pay minimums on everything and focus extra money on one debt at a time.
- Avalanche (highest rate first) saves the most money.
- Snowball (smallest balance first) gives faster wins and motivation.
- Automate payments, stop new borrowing and roll each payment forward.
This article is general information, not personal financial advice. If you are struggling with debt, speak to a free, non-profit debt advice service in your country.