If you’re juggling multiple debts, choosing the right repayment strategy can save you thousands of pounds and help you become debt-free months or years earlier. The difference between methods isn’t just psychological, it’s financial.
The two most popular debt repayment strategies are the debt snowball and debt avalanche methods. This guide explains both approaches, compares them with detailed UK examples, and helps you decide which works best for your financial situation and personality.
Quick comparison: snowball vs avalanche
| Feature | Debt Snowball | Debt Avalanche |
|---|---|---|
| Priority | Smallest balance first | Highest interest rate first |
| Best for | People who need motivation | People who want maximum savings |
| Interest cost | Slightly higher | Lower (mathematically optimal) |
| Psychological wins | Frequent (debts clear faster) | Less frequent (but bigger savings) |
| Time to debt-free | Usually 1-2 months longer | Usually fastest |
Bottom line: Avalanche saves more money, but snowball helps more people stick with the plan. Choose based on what keeps you motivated.
What is the debt snowball method?
The debt snowball method focuses on clearing your smallest debt first, regardless of interest rate. You prioritise balance size over interest cost.
How the debt snowball method works
The process is straightforward:
- List all your debts from smallest to largest balance
- Make minimum payments on all debts
- Put any extra money toward the smallest debt
- Once the smallest debt is paid off, roll that entire payment (minimum plus extra) into the next smallest debt
- Repeat until all debts are cleared
The name “snowball” comes from how your extra payment grows as you eliminate debts. Each cleared debt frees up more money to attack the next one.
Why the debt snowball method works
The primary advantage is psychological momentum. Clearing small debts quickly gives you visible progress and motivation to keep going. Each paid-off debt feels like a concrete win, which helps many people maintain discipline over the long term.
Research from behavioural finance shows that people who use the snowball method are more likely to stick with their debt repayment plan, even if it costs slightly more in interest. The emotional boost from seeing debts disappear outweighs the mathematical disadvantage for many borrowers.
What is the debt avalanche method?
The debt avalanche method focuses on paying off your highest-interest debt first, regardless of balance size. You prioritise interest cost over balance size.
How the debt avalanche method works
The process follows this structure:
- List all your debts from highest to lowest interest rate
- Make minimum payments on all debts
- Put any extra money toward the highest-interest debt
- Once that debt is paid off, roll the payment into the next highest-interest debt
- Repeat until all debts are cleared
The name “avalanche” reflects how eliminating high-interest debt creates a cascading effect that reduces your total interest burden faster.
Why the debt avalanche method works
The primary advantage is maximum interest savings. You pay less total interest because you eliminate the most expensive debts first. Mathematically, it’s the most efficient strategy for minimising borrowing costs.
If you’re disciplined and motivated by numbers rather than emotional wins, the avalanche method will save you the most money over time.
Real UK comparison: £15,000 total debt
Let’s compare both methods using a realistic UK debt scenario that many borrowers face.
Your debt portfolio
| Debt | Balance | APR | Minimum Payment |
|---|---|---|---|
| Credit card 1 | £2,500 | 24.9% | £75 |
| Credit card 2 | £4,000 | 19.9% | £120 |
| Personal loan | £6,000 | 9.9% | £193 |
| Car finance | £2,500 | 7.5% | £78 |
| Total | £15,000 | - | £466 |
You have an extra £200 per month to put toward debt repayment, giving you a total monthly debt budget of £666.
Debt snowball method: smallest to largest
Under the snowball approach, you prioritise debts by balance size:
- Credit card 1 – £2,500 at 24.9% APR
- Car finance – £2,500 at 7.5% APR
- Credit card 2 – £4,000 at 19.9% APR
- Personal loan – £6,000 at 9.9% APR
Results:
- Time to debt-free: 26 months
- Total interest paid: £2,847
- Total amount repaid: £17,847
You’ll pay off two debts (credit card 1 and car finance) by month 17, which provides early psychological wins.
Debt avalanche method: highest rate to lowest
Under the avalanche approach, you prioritise debts by interest rate:
- Credit card 1 – £2,500 at 24.9% APR
- Credit card 2 – £4,000 at 19.9% APR
- Personal loan – £6,000 at 9.9% APR
- Car finance – £2,500 at 7.5% APR
Results:
- Time to debt-free: 25 months
- Total interest paid: £2,614
- Total amount repaid: £17,614
The avalanche method saves £233 in interest and finishes 1 month sooner.
The avalanche method is mathematically optimal, but the snowball method’s psychological wins help many people stick with the plan long enough to become debt-free.
Detailed month-by-month breakdown: snowball method
Here’s how the debt snowball method plays out month by month:
| Month | Debt Paid Off | Extra Payment Goes To | Monthly Payment | Debts Remaining |
|---|---|---|---|---|
| 1-9 | - | Credit card 1 | £275 total | 4 |
| 10 | Credit card 1 | Car finance | £353 total | 3 |
| 11-16 | - | Car finance | £353 total | 3 |
| 17 | Car finance | Credit card 2 | £431 total | 2 |
| 18-24 | - | Credit card 2 | £431 total | 2 |
| 25 | Credit card 2 | Personal loan | £624 total | 1 |
| 26 | Personal loan | - | - | 0 |
By month 17, you’ve cleared two debts completely. This visible progress, seeing accounts close, keeps many people motivated through the remaining months.
Detailed month-by-month breakdown: avalanche method
Here’s how the debt avalanche method plays out month by month:
| Month | Debt Paid Off | Extra Payment Goes To | Monthly Payment | Debts Remaining |
|---|---|---|---|---|
| 1-9 | - | Credit card 1 | £275 total | 4 |
| 10 | Credit card 1 | Credit card 2 | £395 total | 3 |
| 11-19 | - | Credit card 2 | £395 total | 3 |
| 20 | Credit card 2 | Personal loan | £588 total | 2 |
| 21-24 | - | Personal loan | £588 total | 2 |
| 25 | Personal loan | Car finance | £666 total | 1 |
| 26 | Car finance | - | - | 0 |
Only one debt is cleared by month 17, but you’re saving more money because you’re attacking the highest-interest debts first. The savings become more apparent in the later months.
When to choose the debt snowball method
Choose the debt snowball method if:
- You need quick wins to stay motivated
- You’ve struggled to stick with debt repayment plans before
- You have several small debts you can clear relatively quickly
- You value psychological momentum over maximum savings
- You’re motivated by visible progress you can celebrate
Best for: People motivated by visible progress, those who have struggled with debt repayment in the past, and borrowers who need emotional wins to maintain discipline.
The psychological boost from clearing small debts can be the difference between success and giving up. Seeing accounts close provides tangible evidence of progress, which helps maintain discipline over months or years of repayment.
When to choose the debt avalanche method
Choose the debt avalanche method if:
- You’re disciplined and self-motivated
- You can stay focused on long-term goals without needing frequent wins
- You want to save the most money possible
- You’re comfortable with delayed gratification
- You understand the mathematics behind interest
- You have high-interest debts (20% APR or higher)
Best for: People focused on efficiency, those comfortable with delayed gratification, and borrowers with high-interest debts where the savings are significant.
The avalanche method minimises your total borrowing costs by eliminating the most expensive debts first. If you have high-interest debts, the savings from prioritising these can be substantial.
Hybrid approach: combining both methods
You can combine both strategies to get the benefits of each:
- Start with the snowball method to clear 1-2 small debts quickly and build momentum
- Switch to the avalanche method for the remaining high-interest debts to maximise savings
This hybrid approach gives you early psychological wins plus long-term interest savings. For example, if you have three small debts under £1,000 and two large high-interest debts, clear the small ones first for motivation, then switch to prioritising interest rates.
How to accelerate debt repayment
Regardless of which method you choose, these strategies can help you become debt-free faster.
Increase your monthly budget
Even an extra £50 per month makes a significant difference. In our example, increasing from £200 to £250 extra per month reduces the repayment timeline by 2 months with either method.
Ways to find extra money:
- Cut unused subscriptions
- Reduce eating out
- Cancel services you don’t use
- Earn additional income through side work or overtime
Small changes add up quickly when applied consistently.
Use windfalls strategically
Tax refunds, work bonuses, gift money, or unexpected income should go directly toward debt repayment. A £1,000 windfall applied to your highest-interest debt can save £150-£250 in future interest.
Key principle: Resist the temptation to spend windfalls on non-essentials. Every pound put toward debt reduces your total interest cost and shortens your repayment timeline.
Negotiate lower interest rates
Call your lenders and ask for rate reductions. Lenders may lower your rate if:
- Your credit score has improved since you took out the debt
- You’ve been a good customer with consistent payments
- You mention considering balance transfer options or consolidation loans
Even a 2-3% reduction saves hundreds of pounds over time. Many lenders have retention teams authorised to offer better rates.
Consolidate high-interest debt
If you have multiple debts above 15% APR, consolidating into a single loan at 8-10% APR can save thousands of pounds. This is particularly effective if you have several credit cards with high rates.
Compare consolidation loan options to see if this works for your situation. Be careful to avoid taking on new debt after consolidating. Close the old accounts and stick to your repayment plan.
Tracking your debt repayment progress
Whichever method you choose, tracking your progress visually helps maintain motivation. Update your balances monthly and watch your total debt shrink over time.
Tracking options:
- Spreadsheet: Track each debt’s balance, minimum payment, and progress. Create a simple chart showing your total debt decreasing month by month
- Budgeting apps: Free apps like Snoop, Money Dashboard, or Emma can automatically track your debts and show progress. Some apps even calculate how much interest you’re saving by sticking to your plan
Many people find visual representation more motivating than just seeing individual account balances. Seeing your total debt shrink keeps you motivated through the long haul, especially during months when progress feels slow.
Common debt repayment mistakes to avoid
Only making minimum payments
The problem: Minimum payments on high-APR debts barely cover interest. You’ll stay in debt for years and pay thousands extra.
The solution: Always pay more than the minimum if possible, even if it’s just an extra £25-£50 per month.
Taking on new debt while paying off old debt
The problem: Adding new debt sabotages your progress and extends your debt-free timeline.
The solution: Commit to no new borrowing until you’re debt-free, except for genuine emergencies. Avoid new credit cards, loans, or finance agreements.
Not building an emergency fund first
The problem: If you have no savings and an unexpected expense hits, you’ll need to borrow again, restarting the debt cycle.
The solution: Build a small emergency fund (£500-£1,000) before aggressively attacking debt. This prevents new debt from emergencies derailing your progress.
Giving up after a setback
The problem: Missing a month or two makes people abandon their entire strategy.
The solution: Life happens. Unexpected expenses, income changes, or personal challenges can interrupt your plan. The key is to restart and keep going rather than abandoning the strategy entirely.
Becoming debt-free is a marathon, not a sprint. Setbacks are normal, but persistence leads to success.
The psychology of debt repayment
Understanding your own motivation style is crucial to choosing the right method.
Two motivation types:
- Numbers-focused: Motivated by interest savings and optimal outcomes. They want efficiency and maximum savings.
- Progress-focused: Motivated by visible progress and emotional wins. They need to see accounts closing and debts disappearing.
Neither approach is wrong. The best debt repayment method is the one you’ll actually stick with long enough to become debt-free. If the snowball method keeps you motivated but costs £200 more in interest, that’s still better than abandoning the avalanche method after six months because you lost motivation.
Quick decision guide
Not sure which method to choose? Ask yourself these questions:
Choose snowball if you answer yes to:
- Do you need to see debts disappearing quickly to stay motivated?
- Have you tried debt repayment plans before and given up?
- Do you have several small debts you could clear in a few months?
- Would you rather feel progress than save every possible pound?
Choose avalanche if you answer yes to:
- Can you stay motivated without frequent wins?
- Do you understand how interest compounds and want to minimise it?
- Do you have debts with interest rates above 20%?
- Would you rather save money than see quick progress?
Still unsure? Start with snowball for the first few months to build momentum, then switch to avalanche for the remaining high-interest debts. This hybrid approach gives you the best of both worlds.
Put it into practice
Both the debt snowball and avalanche methods work. Choose the one that matches your personality and motivation style. The mathematical difference is usually modest compared to the benefit of actually completing your repayment plan.
To model your own debt repayment strategy:
- Calculate how overpayments affect each debt to see the impact of different approaches
- Compare consolidation loan options if you have multiple high-interest debts
- Track your progress monthly and adjust your strategy as needed
The most important step is starting. Whether you choose snowball or avalanche, committing to a plan and sticking with it will get you debt-free faster than making only minimum payments.
Key takeaways
- Avalanche saves more money by prioritising high-interest debts, typically saving £200-£500 on a £15,000 debt portfolio
- Snowball provides more motivation by clearing small debts quickly, helping people stick with the plan
- The difference is usually modest compared to the benefit of actually completing your repayment plan
- You can combine both methods by starting with snowball for momentum, then switching to avalanche for savings
- The best method is the one you’ll stick with long enough to become debt-free
For more practical finance guides, explore our guides.