Debt snowball vs avalanche: how to pay off debt in the UK
If you have more than one debt, the hardest question is often where to start. The debt snowball and debt avalanche are two simple methods for deciding which debt to clear first. Here is how each one works, with a UK example, and how to pick the right one for you.
Before you start: priority debts come first
Both methods are for non-priority debts such as credit cards, store cards, overdrafts, personal loans, catalogue and buy now pay later balances. Before you think about those, make sure your priority debts are under control. Free UK debt charities class these as priority because missing them can have the most serious consequences, such as losing your home, having your energy cut off or facing court action:
- Rent or mortgage arrears
- Council tax
- Gas and electricity
- Court fines and County Court Judgments
- Child maintenance
- Income Tax, National Insurance or VAT owed to HMRC
- TV licence
- Hire purchase agreements for something you need, such as a car for work
If you are behind on any of these, speak to a free debt adviser before using either method below. StepChange, National Debtline, Citizens Advice and MoneyHelper are all free. Be wary of any company that charges for debt advice or promises to "wipe" your debts.
The rules that apply to both methods
- Always pay at least the minimum on every debt. Missing payments leads to fees, extra interest and marks on your credit file.
- Find your "extra" amount. This is money left over each month after needs and minimum payments. A monthly budget shows you exactly what this is.
- Put all the extra on one target debt until it is cleared.
- Roll it over. When a debt is paid off, add its old minimum payment to your extra and attack the next debt. Your monthly payment grows each time, which is where the speed comes from.
The only difference between the two methods is which debt you target first.
The debt snowball: smallest balance first
With the snowball method, you list your debts from the smallest balance to the largest, ignoring interest rates, and clear the smallest first.
Why people like it: you get a win quickly. Clearing a whole debt in the first month or two feels great, cuts the number of payments you have to juggle and gives you momentum. Research into debt repayment behaviour has suggested that small early wins help some people stick with it, and sticking with it is what matters most.
The downside: if your biggest debt also has the highest interest rate, you may pay more interest overall than with the avalanche.
The debt avalanche: highest interest rate first
With the avalanche method, you list your debts from the highest interest rate (APR) to the lowest, ignoring balances, and clear the most expensive first.
Why people like it: it is the mathematically cheapest route. Every extra pound goes where it saves the most interest, so you usually pay less in total and may finish sooner.
The downside: if your most expensive debt is also large, it can be months before you clear a whole debt, which some people find demotivating.
A UK example
Imagine someone with these three debts and £150 a month extra to put towards them on top of the minimums. The figures are illustrative.
| Debt | Balance | APR | Minimum payment |
|---|---|---|---|
| Store card | £400 | 29.9% | £25 |
| Credit card | £2,200 | 24.9% | £60 |
| Personal loan | £3,500 | 8.9% | £110 (fixed) |
Snowball order
Store card (£400) → credit card (£2,200) → personal loan (£3,500). The store card gets £25 + £150 = £175 a month and is gone in about three months. Then the credit card gets £60 + £175 = £235 a month.
Avalanche order
Store card (29.9%) → credit card (24.9%) → personal loan (8.9%). In this example the order is the same, because the smallest debt also happens to be the most expensive. That is common in the UK, where store cards and catalogue credit often carry high rates.
Now imagine the credit card was at 34.9% instead. The avalanche would target the credit card first and the snowball would still start with the store card. The avalanche would save some interest, while the snowball would give a quicker first win. Both would get you debt-free; the difference is usually smaller than people expect, and far smaller than the difference between having a plan and not having one.
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Which method should you choose?
- Choose the snowball if you have lots of small debts, you have tried and given up before, or you need to see progress to stay motivated.
- Choose the avalanche if you are disciplined, your highest-rate debt is a big one, or you simply hate paying more interest than you have to.
- Try a hybrid: clear one or two tiny debts first for a quick win, then switch to the avalanche for the rest.
The best method is the one you will actually keep doing for months. Pick one today and start.
UK tips that make either method faster
Check for early repayment terms on loans
You have a legal right to repay a regulated personal loan early, but the lender may be allowed to charge a limited amount of extra interest for doing so. Ask your lender for a settlement figure before overpaying, and check that overpayments reduce the balance rather than just the term.
Watch out for 0% deals ending
If one of your cards is on a 0% promotional rate, note the date it ends. When it does, the rate jumps, and that card may become your avalanche target overnight.
Stop the debts growing
Remove saved card details from shopping sites and apps, and consider switching off buy now pay later options. It is hard to clear debts while new ones are being added.
Ask about Breathing Space
In England and Wales, the government's Breathing Space scheme can give you 60 days' protection from most creditor action, with most interest and charges frozen, while you get proper advice. You access it through a debt adviser, and there is a separate version for people receiving mental health crisis treatment. Scotland has its own scheme with a similar aim, called a moratorium.
Find extra money
Every £10 you free up speeds things up. Our guide to 25 ways to cut household bills has ideas that cost nothing to try.
Many people find a good personal finance book keeps them motivated through a long payoff. Browse popular UK money books on Amazon UK (affiliate link placeholder).
What about an emergency fund?
A small cash buffer stops one broken boiler or car repair from going straight back on a credit card. Many people keep a starter fund of a few hundred pounds while paying off debt, then build a bigger one once they are debt-free. See how to build an emergency fund on a low income.
Summary
- Deal with priority debts first, and get free advice if you are behind.
- Pay every minimum, then put all your extra on one target debt.
- Snowball = smallest balance first, for motivation.
- Avalanche = highest interest first, for the lowest total cost.
- Roll each cleared payment into the next debt until you are debt-free.
More guides
- How to make a monthly budget in the UK (with a free 50/30/20 example)
- How to build an emergency fund on a low income in the UK
- 25 ways to cut household bills in the UK
- How to save money on your food shop in the UK
- Sinking funds explained: how to save for irregular bills in the UK
- How to budget on Universal Credit
- How to do a no-spend challenge in the UK
- How to save for Christmas in the UK without going into debt
- Budgeting for students in the UK
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