Snowball vs avalanche
Both methods work the same way: pay the minimum on every debt, and put every spare penny towards one target debt. When the target is paid off, its payment rolls onto the next one, so your payments "snowball" as debts disappear. They differ only in which debt you target first:
- Avalanche: highest interest rate first. Mathematically the cheapest. Money goes where it's costing you most, so you pay the least interest overall.
- Snowball: smallest balance first. You clear whole debts sooner, which gives quick wins and fewer bills to juggle. It usually costs a bit more interest.
The best plan is the one you'll stick with. If the difference in interest above is small, the snowball's early wins may be worth it. If it's large, the avalanche is worth the patience.
Getting the most out of the plan
- Stop adding to the debts. The plan assumes no new spending on the cards you're paying off.
- Look for a cheaper rate. A 0% balance transfer card or a lower-rate consolidation loan can cut the interest a lot. Check the transfer fee and what happens when the offer ends.
- Throw windfalls at the target debt. Tax refunds, bonuses and money from selling things you don't need all shorten the plan.
- Keep a small emergency fund so an unexpected bill doesn't go back on a card.
Why minimum payments take so long
Credit card minimums are set low, often just a few percent of the balance or the interest plus a little. At those payments most of the money goes on interest, which is why paying only the minimum can take many years. The calculator shows the minimums-only figure under the results for comparison. Real card minimums usually fall as the balance falls, which makes it take even longer than shown.
Struggling with debt?
If you can't cover the minimum payments, free, confidential help is available. In the UK, contact StepChange, National Debtline or Citizens Advice. In the US, look for a non-profit credit counselling agency accredited by the NFCC. Be wary of companies that charge upfront fees to "fix" debt.