Snowball or avalanche: which way to pay off debt

One method saves you the most money. The other is the one people actually finish. In real life the gap between them is often tiny.

Updated August 12, 2026

If you are paying off more than one debt, you have to pay the minimum on each of them. Any money left over is yours to aim wherever you like.

Both methods put that spare money at one debt and pay only the minimum on the rest. When a debt is cleared, its payment moves to the next one. They differ on one thing: which debt do you clear first?

• Avalanche - start with the highest interest rate. This always pays the least interest in total.
• Snowball - start with the smallest amount owed. Debts disappear sooner, which helps you keep going.

An example with real numbers

Three debts, and €150 a month spare on top of the minimum payments:

The two methods disagree about where to start. The avalanche goes for the store card, because 26% is the most expensive. The snowball goes for the instalments, because €450 is the smallest amount.

The avalanche saves €33 over 17 months. That is about €2 a month. Both methods clear the debt in the same number of months.

For a lot of people, that is the honest answer, and it is rarely the answer you hear.

So which should you pick?

Work out both for your own debts. Then use this rule: if the avalanche saves a real amount of money, pick the avalanche. If it saves you the price of a coffee each month, pick the one you are more likely to finish.

For most people that is the snowball. Giving up in month four costs far more than €33.

Two things make the avalanche clearly worth it:

• A big debt at a high rate. Thousands owed at 20% or more is where the money matters more than the motivation.
• A long payoff. Interest builds up over time, so a four-year plan rewards the right order far more than a 17-month one.

And one thing makes the snowball the right choice: if you have tried before and stopped. Seeing a debt disappear keeps people going, and that is not a small thing. It is the difference between a plan that works on paper and one that works.

Watch out for 0% debts

Look at what the snowball did in the example. It put the spare €150 at the interest-free instalments first.

Clearing a 0% debt early saves you nothing. You are using money that could be cutting down a 26% debt to pay off something that costs you no interest at all.

So if you like the snowball, make one change: leave anything at 0% out of the order and just pay its minimum until the debts that charge interest are gone. You keep the good feeling and stop losing money.

Before you start either one

1. Write down every debt with the amount owed, the interest rate and the minimum payment. Most people are wrong about at least one rate, and it is usually the expensive one.
2. Look for anything above about 20%. Store cards and overdrafts often hide up here. They should almost always go first, whichever method you use.
3. Keep a little money aside. If you put every last euro at your debts and then borrow again to fix the car, you are back where you started. Save one month of basic costs first.
4. Decide the extra payment as a fixed amount. "Whatever is left over" is reliably nothing.

Whichever order you choose, the extra payment has to come from somewhere. That is a budgeting question - see how to make a budget.

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