Money & Calculations
Which Debt Should You Pay Off First? Avalanche vs Snowball, With Real Numbers
With £500 a month across three debts, highest rate first saves £100.03 against smallest balance first. Both methods compared, with a calculator.
Written by Ahad NoorPublished 5 min read
If you owe money on more than one thing, the question is where the spare money should go. Two methods are common. The avalanche puts extra money on the debt with the highest interest rate. The snowball puts it on the smallest balance, so you clear debts quickly and free up their payments.
Mathematically the avalanche never costs more. In practice the gap can be small, which is why the better method is partly about what you will stick to. This guide runs both on one example with three debts, so you can see the real difference, then shows how to test your own debts with the loan repayment calculator.
Contents
The example: three debts and £500 a month#
| Debt | Balance | Interest rate | Minimum a month |
|---|---|---|---|
| Store card | £2,400 | 24.9% | £75 |
| Personal loan | £9,000 | 8.9% | £190 |
| Car finance | £6,500 | 5.9% | £140 |
The minimums add up to £405 a month. Suppose you can afford £500, which leaves £95 a month to put on one debt. Which one?
How much does each payoff method cost?#
Highest rate first costs £2,858.84 in interest and takes 42 months; smallest balance first costs £2,958.87 over 42 months; paying only the minimums costs £4,596.63 over 56 months.
| Method | Months to clear everything | Total interest | Order debts are cleared |
|---|---|---|---|
| Minimums only (£405) | 56 | £4,596.63 | Card month 53, car month 53, loan month 56 |
| Avalanche (highest rate first) | 42 | £2,858.84 | Card month 17, loan month 38, car month 42 |
| Snowball (smallest balance first) | 42 | £2,958.87 | Card month 17, car month 33, loan month 42 |
Worked example: where the £100 difference comes from
Assumptions: Same three debts, £500 a month.
- Both methods clear the store card first, because it has both the highest rate and the smallest balance.
- After that they differ. The avalanche attacks the 8.9% personal loan; the snowball attacks the 5.9% car finance because its balance is smaller.
- The snowball therefore leaves the 8.9% loan outstanding longer, which costs £100.03 more in interest.
Here the methods finish in the same month. The avalanche is cheaper, but not by much.
Which method should you pick?#
The avalanche is cheapest whenever the rates differ a lot, and the larger the balances and the rate gaps, the bigger the saving. The snowball gives earlier wins, which keeps some people motivated. If your smallest debt also has the highest rate, as with the store card here, the two methods start the same way.
The most important step is the one both methods share: put every spare pound toward debt, and never miss a minimum. Use the loan calculator on each debt with the extra payment you plan, to see the interest saved and the payoff date for that debt alone.
Quick checklist
- List each debt with its balance, interest rate and minimum payment.
- Work out how much you can afford each month above the minimums.
- Choose a method and apply all the spare money to the first debt.
- When a debt is cleared, add its old payment to the next one.
- Check whether any debt has an early repayment charge before paying it off early.
Mistake: Skipping minimums on the other debts to pay one faster.
Instead: Missed payments bring charges and can harm your credit record. Always pay every minimum.
Mistake: Picking by balance alone when rates differ a lot.
Instead: A large gap between rates makes the avalanche saving bigger, so check the rates first.
Mistake: Taking on new debt while paying off the old.
Instead: New borrowing resets the calculation, so avoid it until the plan is done.
Try the tool
Loan Repayment Calculator
Test each debt on its own with an extra payment to see the interest saved and the new payoff date.
Open the Loan Repayment CalculatorRelated guides: How loan repayments work, paying a loan off early with a lump sum.
Frequently asked questions#
Pay every minimum, then put all spare money on the debt with the highest interest rate. When it is cleared, move to the next highest. It minimises the total interest.
Pay every minimum, then put all spare money on the smallest balance. When it is cleared, move to the next smallest. It clears debts sooner but can cost slightly more interest.
Usually the one with the highest interest rate, because it costs the most per pound owed. If rates are close, the smallest balance may be a better motivator.
In this example, £95 a month extra (£500 against £405) saves £1,737.80 in interest and 14 months.
Compare the charge with the interest you would save. Ask your lender for a settlement figure in writing first.
Sources
- Citizens Advice – Paying off a credit agreement early (checked 9 November 2026)
Ahad Noor
Ahad Noor builds and maintains Momentix, including its calculators, converters and the guides on this blog.
Each guide is checked against the matching Momentix tool, so the worked examples show the same figures the tool gives for the same inputs.
