The Debt You're Carrying Is Costing More Than You Realise
Most people juggling multiple debts — a credit card balance, a personal loan, a persistent overdraft — never stop to ask whether the order of repayment matters. It does. Two households with identical debts and identical budgets can end up paying thousands of pounds apart in total interest based purely on which debt they attack first.
That gap comes down to two competing methods: the debt avalanche and the debt snowball. Understanding which one fits your situation is one of the highest-leverage decisions you can make this summer.
The Avalanche: Attack the Most Expensive Debt First
The avalanche method is the mathematically optimal route. You sort every debt by interest rate from highest to lowest, then direct every spare pound at the top-rate debt while paying minimums on everything else. Once that's cleared, you roll the payment into the next one down the list.
In the UK, the typical hierarchy runs like this: store cards (often 34–39.9% APR) at the top, followed by standard credit cards (18–29.9% APR), then personal loans (6–15% APR from providers such as Sainsbury's Bank or Zopa), with 0% promotional deals and student loans at the bottom. Your Monzo arranged overdraft likely charges 19–39% EAR — often higher than a standard credit card rate, which surprises people.
The avalanche minimises total interest paid. If you're carrying £3,000 on a Barclaycard at 24.9% APR and £1,500 on a personal loan at 7.9%, the credit card costs roughly £62 a month in interest versus the loan's £10. You clear the card first. There is no scenario where paying the cheaper debt faster saves money in absolute terms.
The Snowball: Small Wins First
The snowball method ignores interest rates entirely. You sort debts by balance from smallest to largest and hammer the smallest one first. Clear it, take the win, roll the payment into the next one.
The research case for the snowball is psychological rather than mathematical. Studies consistently find that people who see visible progress — actually eliminating a debt line, watching the count drop from five to four — are more likely to sustain the repayment effort. A slightly suboptimal strategy you execute beats an optimal strategy you abandon at month three.
A Real Comparison
Someone carrying £1,200 on a Next store card (39.9% APR), £2,500 on a Lloyds loan (9.9% APR), and £4,700 on a Halifax credit card (22.9% APR) has £350 a month to put against debt after minimums.
- Avalanche order: Next card first (39.9%), then Halifax card (22.9%), then Lloyds loan (9.9%). Total interest: approximately £1,840. Time to debt-free: 28 months.
- Snowball order: Next card first (smallest balance — £1,200), then Lloyds loan (£2,500), then Halifax card (£4,700). Total interest: approximately £2,210. Time to debt-free: 29 months.
Change the numbers so the store card balance is £4,000 instead of £1,200 and the gap widens to over £1,100. The direction is always the same: avalanche saves money, snowball saves motivation.
The Hybrid Most Debt Advisers Actually Use
Clear any debt under £300 immediately regardless of rate — the administrative relief outweighs the marginal interest cost. Then switch to a pure avalanche for everything above that threshold. That's broadly what Citizens Advice and StepChange advisers walk clients through in practice.
One additional move worth considering: a 0% balance transfer. If you can shift higher-rate credit card balances to a 0% deal — Halifax currently offers up to 30 months, Barclays and Santander also have competitive offers — the interest rate question disappears for that balance entirely. Pay it off before the promotional window ends, ideally with two months to spare, and you've converted an expensive revolving debt into a timed paydown. The transfer fee (typically 2–3%) is almost always worth paying.
Set up a direct debit for the minimum payment the day the new card account opens. Miss one payment on a 0% deal and many providers will revoke the promotional rate and apply the standard rate retroactively.
Which Method Should You Use
If your highest-rate debt is also your smallest balance — avalanche. The two methods align and you get both the mathematical win and the motivational win simultaneously.
If your highest-rate debt is a large balance that will take 18 months or more to clear and you have smaller debts you could eliminate in three to four months — clear those first, then switch to avalanche. The hybrid costs almost nothing extra in interest and may be the difference between sustaining the effort and quietly stopping.
If you're struggling to meet minimum payments or being contacted by creditors, neither method applies yet. Call StepChange on 0800 138 1111 — free, confidential — before anything else.