How to pay off debt after Christmas: snowball vs avalanche
If January leaves you with more debt than you'd like, a clear plan makes the difference. Both methods below work. The best one is the one you'll stick with.
Step 1: list everything
Write down each debt with its balance, interest rate (APR) and minimum payment. Then work out how much extra you can pay each month on top of the minimums.
The avalanche method
Pay the minimum on everything, and put all your extra money on the debt with the highest interest rate. When it's gone, move on to the next highest. This saves the most money.
The snowball method
Pay the minimum on everything, and put all your extra money on the smallest balance. When it's gone, roll that payment into the next smallest. You clear debts faster at the start, which keeps you motivated.
Example
| Store card, £400 at 30% | Snowball: first |
| Credit card, £2,500 at 24% | Avalanche: first |
| Loan, £5,000 at 9% | Both: last |
Avalanche saves more interest here, but snowball clears the store card in under three months, which can be the boost you need.
Cut the interest
A 0% balance transfer credit card can stop interest while you pay down. Check the transfer fee and when the 0% ends, and only do it if you won't spend on the old card.
When to get help
If minimum payments are a struggle, contact a free debt charity like National Debtline or StepChange before you miss payments. They can help you deal with lenders. Avoid paid debt management firms.
Our debt payoff planner compares snowball and avalanche for your own debts and shows your debt-free date.
See the planner