Debt

Snowball vs avalanche: which clears your debt faster?

6 min read

You've got more than one debt. You've got some money to throw at them each month beyond the minimums. Which one do you attack first?

There are two well-known strategies. Both pay the minimums on every debt every month, no matter what; the difference is where the extra cash goes.

The two strategies in one line each

• Avalanche - extra goes to the debt with the highest interest rate (APR). Mathematically optimal: you pay the least interest overall.
• Snowball - extra goes to the debt with the smallest balance. Faster psychological wins as you clear individual debts; you pay slightly more interest overall.

A worked example

Three debts, £200 of extra cash available each month on top of the minimums:

• Barclaycard: £3,200 at 24.9% APR, min £64/mo
• Overdraft: £800 at 39.9% APR, min £20/mo
• Personal loan: £5,000 at 12.9% APR, min £165/mo

With those numbers, the Excelergy Debt calculator gives roughly:

• Avalanche: debt-free in 31 months, total interest ~£1,460. Order: Overdraft → Barclaycard → Personal loan.
• Snowball: debt-free in 31 months, total interest ~£1,540. Order: Overdraft → Barclaycard → Personal loan. (In this case the order happens to be identical because the overdraft is both the highest APR AND the smallest balance.)

£80 over nearly three years. Not life-changing. In most realistic three-debt setups, the gap between the two strategies is a few hundred pounds at most.

It gets bigger when you have a long-running, high-APR debt and a small-balance, low-APR debt. Avalanche pulls ahead. It also gets bigger over longer payoff timeframes.

So why would anyone NOT pick avalanche?

Because finishing matters more than optimising.

The research that originally popularised snowball (by behavioural economists, not banks) found that people on the snowball method are more likely to stick with it and clear their debts at all. The reason: clearing the smallest debt early gives you a concrete win - one fewer card statement, one fewer minimum payment - and that momentum keeps you going.

If you've started a debt payoff plan three times and stalled three times, snowball is probably the right choice for you. The "optimal" strategy you don't finish costs more than the "good enough" strategy you do.

The best strategy is the one you'll actually stick to until the last debt is cleared.

Custom: when neither is right

Sometimes there's a debt you want to clear first for non-mathematical reasons. Maybe it's owed to a friend or family member. Maybe it's the one you feel worst about. Maybe it's tied to a subscription you can't cancel until it's paid off.

The Excelergy debt tool has a third option - Custom - where you drag your debts into the priority order you want. The minimums still go to everything; the extras follow your chosen order. The strategy-comparison panel then shows you exactly how much more (or less) interest your choice costs versus a pure avalanche.

What about my mortgage?

Don't throw all your extra cash at your mortgage while you're still carrying credit-card debt at 24.9% APR. That's mathematically backwards by a lot.

Mortgages also have fixed terms and lender-set payment recalculations - when your fixed rate ends, the lender recalculates your monthly payment so you still finish on the contracted date at the new rate. You don't need to overpay to "stay on track" - that's already built in.

In Excelergy, you can mark a debt as "term-locked" so the strategy doesn't accelerate it. The mortgage receives only its minimum payment; the extra cash attacks the higher-APR debts. When all the smaller debts are cleared and your mortgage is the only thing left, then you can reconsider whether to overpay.

The actual decision

If you're rational and disciplined: avalanche. You'll pay the least interest.

If you've struggled to stick with debt repayment plans before: snowball. Quick wins matter more than the £200 you might save with avalanche over four years.

If you're not sure: pick one, run the numbers in the Debt calculator, and look at the strategy-comparison panel. Often the difference is so small it doesn't matter, and you can just pick the one that feels right.