Paying off debt in the UK: avalanche vs snowball
Compare the avalanche and snowball methods, put priority debts first and learn how to talk to lenders and get free debt advice in the UK.
Consumer debt on credit cards, overdrafts, store cards and personal loans can grow faster than you pay it down. The interest charged each month on high-cost debt is often larger than people expect.
This guide explains how to decide which debt to pay first, compares the avalanche and snowball methods, and covers talking to lenders, free debt advice in the UK and ways to avoid borrowing again.
In 30 seconds
- List every debt with its balance, interest rate and minimum payment.
- Always pay the minimum on every debt to avoid charges and damage to your credit file.
- Avalanche targets the highest interest rate first; snowball targets the smallest balance first.
- Contact lenders early if you cannot pay. Free debt advice is available across the UK.
- Stop new borrowing while you pay down what you owe.
Start with a full list
You cannot plan a payoff without seeing the whole picture. Write down every debt except your mortgage: credit cards, store cards, overdrafts, personal loans, car finance, buy now pay later balances and any money owed to family.
For each one, record the balance, the interest rate (APR), the minimum monthly payment and any promotional period that ends soon. Your statements and online banking show these details. A free copy of your credit report from one of the credit reference agencies can help you find anything you have forgotten.
| Debt | Balance | Interest rate (APR) | Interest in first month |
|---|---|---|---|
| Store card | £800 | 29% | about £19 |
| Credit card | £3,000 | 24% | about £60 |
| Personal loan | £4,000 | 9% | about £30 |
| Total | £7,800 | about £109 |
The first-month interest here is a simple estimate: balance multiplied by APR, divided by 12. Lenders calculate interest in slightly different ways, but the estimate shows where your money is going.
Priority debts come first
Not all debts carry the same consequences. UK debt advisers separate priority debts from other debts. Priority debts are those where not paying can lead to serious consequences, such as losing your home, having your energy supply affected, or court action.
- Rent and mortgage arrears
- Council tax arrears
- Gas and electricity arrears
- Court fines and child maintenance
- Income Tax, National Insurance or VAT owed to HMRC
- Hire purchase or logbook loans where the goods, such as a car, can be taken back
Keep these up to date before putting extra money towards credit cards or loans. If you are behind on any of them, get free debt advice straight away.
Avalanche versus snowball
Once priority debts are covered and every minimum payment is being made, decide where extra money goes. There are two common methods.
The avalanche method
Pay the minimum on everything, then put every spare pound towards the debt with the highest interest rate. When it is cleared, move to the next highest rate. In the example above, the order would be the store card (29%), the credit card (24%), then the loan (9%). This method usually costs the least in total interest.
The snowball method
Pay the minimum on everything, then put spare money towards the smallest balance, whatever its rate. When it is cleared, add its payment to the next smallest. Early wins can help you keep going. It usually costs more in interest than the avalanche method, unless your smallest debts also carry the highest rates.
| Avalanche | Snowball | |
|---|---|---|
| Order | Highest interest rate first | Smallest balance first |
| Total interest paid | Usually lowest | Usually higher |
| Motivation | First debt may take longer to clear | Quick early wins |
| Best for | People who stick to a plan based on numbers | People who need visible progress to keep going |
In the example, both methods start with the store card, because it has both the highest rate and the smallest balance. The difference only appears later. Use the calculator below to test your own figures.
A step-by-step payoff plan
- List all debts
Record the balance, APR, minimum payment and any promotional end date for each one.
- Protect priority bills
Make sure rent or mortgage, council tax, energy and similar bills are covered first.
- Set a realistic monthly amount
Use your budget to find how much you can pay in total each month without relying on new credit.
- Choose avalanche or snowball
Pay the minimum on everything and send the extra to your target debt.
- Automate payments
Set direct debits for at least the minimum on every account to avoid missed payments and late fees.
- Roll payments forward
When a debt is cleared, add its payment to the next target instead of spending it.
Talking to your lender
If you cannot keep up with payments, contact the lender before you miss one. UK lenders regulated by the FCA are expected to treat customers in financial difficulty fairly. Options they may offer include a temporary reduced payment, freezing interest or charges, or a longer repayment plan.
Before you call, have your budget ready so you can show what you can afford. Ask the lender to confirm any agreement in writing, and ask how it will be reported on your credit file.
Free debt advice
Free, confidential debt advice is available from MoneyHelper, StepChange, National Debtline and Citizens Advice. An adviser can help you work out a budget, deal with creditors and explain formal options. In England and Wales, a debt adviser can also help you apply for Breathing Space, which can pause most interest, charges and enforcement for a period while you get advice. Scotland and Northern Ireland have their own schemes and procedures.
Avoiding new debt
Paying off debt only works if the balances stop growing. A few habits help.
- Build a small emergency fund alongside your payoff plan so a surprise bill does not go on a card.
- Remove saved card details from shopping sites and apps.
- Be careful with buy now pay later. It is easy to spread several small purchases and lose track of the total.
- Plan for irregular yearly costs with sinking funds, as described in our budgeting guide.
- Keep one card for genuine emergencies only, with a low limit, if you want a backup.
Official sources
- MoneyHelper: free debt advice tools and how to find a debt adviser.
- Citizens Advice: free help with priority debts, lenders and bailiffs.
- GOV.UK: current rules on Breathing Space and council tax arrears.
- Financial Conduct Authority (FCA): check that any debt help firm is authorised.
Frequently asked questions
Is the avalanche or snowball method better?
The avalanche method normally costs less in interest because it targets the most expensive debt first. The snowball method clears small debts first, which some people find easier to stick with. The best method is the one you will follow until every debt is paid.
Will contacting my lender hurt my credit score?
Asking for help does not in itself damage your credit file. Agreeing a reduced payment plan or missing payments may be recorded, which can affect future borrowing. Missed payments without any agreement usually cause more damage, so contacting the lender early is generally the better option.
Should I use savings to pay off debt?
Using savings to clear expensive debt can save a lot of interest, because savings interest is usually far lower than credit card interest. Keep a small emergency fund, though, so a surprise bill does not go straight back on a card. Look at your full situation before emptying your savings.
What is Breathing Space?
Breathing Space is a scheme in England and Wales that can pause most enforcement action and freeze most interest and charges on eligible debts for a set period while you get advice. You access it through a debt adviser, such as a free advice service. Check GOV.UK or an adviser for current eligibility rules.
Is a debt consolidation loan a good idea?
It can help if the new loan has a lower total cost than your current debts and you stop using the cleared cards. It can make things worse if the loan runs for much longer, carries fees or is secured on your home. Compare the total amount repayable, not just the monthly payment, and consider free advice first.
