How to pay off debt

To clear several debts faster, pay the minimum on all of them, then put every spare pound on one debt until it clears. Two methods pick which debt that is: the snowball method (smallest balance first, for a quick win) and the avalanche method (highest APR first, for the least interest). When a debt clears, its old payment rolls onto the next one, and that rolling is what gets you debt-free sooner.

APR stands for annual percentage rate, the yearly cost of borrowing shown as a percentage. Throughout this article a higher APR simply means a more expensive debt.

The two methods

Both methods use the exact same budget and the same rule: pay the minimum on every debt so none falls behind, then aim everything left over at a single target debt. The only thing that differs is which debt you target.

The snowball method targets your smallest balance first, whatever its interest rate. You clear it, feel the progress, then point that whole payment at the next-smallest debt. The name comes from a snowball rolling downhill: each cleared debt adds its payment to the next, so the amount hitting each balance grows.

The avalanche method targets your highest APR first, whatever its size. Because the priciest debt is the one piling on the most interest, clearing it first stops that cost building up, so you usually pay less in total. Once it clears, you move to the next-highest APR.

UK APR is a legally effective annual rate, so to work out the interest added each month we convert it properly with the effective monthly rate formula, (1 + APR/100)^(1/12) − 1, rather than just dividing the APR by twelve. That keeps the maths honest, though real lenders charge interest daily and your minimums usually shrink as the balance falls, so treat any total as an estimate.

Which one to choose

The avalanche method is the mathematically cheaper choice: targeting the highest APR first always pays the least interest when your rates differ, and the wider the gap between your most and least expensive debt, the more it saves. If lowest total cost is what matters to you, start there.

The snowball method is about behaviour, not maths. Clearing a whole debt early is a real milestone, and that sense of progress keeps a lot of people going when the bigger balances would otherwise feel endless. If you have tried before and lost momentum, the snowball is often the one you actually finish.

There is no wrong answer here. The best method is the one you will stick with to the end, because a plan you abandon saves nothing. If your debts are close in both size and rate, the two methods land in almost the same place anyway.

The order to do things in

Before throwing spare cash at any debt, get the basics in order. A sensible sequence for most people looks like this:

• Keep a small emergency buffer. A modest cushion, often suggested at around £1,000 or a month of essential bills, stops the next surprise bill putting you straight back on the credit card. You do not need months of savings first, just enough to absorb a shock.
• Pay every minimum, every time. Missing a payment brings charges and can mark your credit record, which makes everything dearer. The minimums are non-negotiable and always come first.
• Aim the surplus at one target debt. Whatever is left after the buffer and the minimums goes at a single debt, chosen by your method: the smallest balance for snowball, or the highest APR for avalanche.
• Roll the payment on. When that debt clears, do not pocket its old payment. Add it to what you were already paying on the next target, and keep your total monthly outlay the same.

Finding the surplus in the first place is a budgeting job. If you are not sure how much spare cash you really have each month, our guide to budgeting basics walks through building a budget from your take-home pay so you know what is genuinely free to put on debt.

A worked example

Say you have three debts:

• A store card: £1,200 at 21.9% APR, minimum £35 a month.
• A credit card: £3,400 at 27.9% APR, minimum £90 a month.
• A personal loan: £5,000 at 8.9% APR, minimum £160 a month.

That is £8,600 of debt and £285 of minimums in total. Suppose you can find another £120 a month from your budget, giving a fixed total of £405 a month that stays the same until everything clears.

With the snowball method you clear the £1,200 store card first because it is the smallest balance, then the credit card, then the loan. On these numbers it clears the lot in about 29 months and costs roughly £1,881 in interest.

With the avalanche method you go after the credit card first, because its 27.9% APR is the priciest, then the store card, then the loan. That clears everything in about the same 29 months but costs roughly £1,791 in interest, around £90 less, simply because the most expensive debt spends less time gathering interest.

The £90 gap is modest here because the rates are fairly close. Stretch the spread wider, or add a few more years, and the avalanche saving grows. To try your own balances, rates and monthly budget, and compare both methods side by side, open the debt payoff calculator. These are estimates: a real lender charges interest daily and may shrink the minimum as the balance drops.

Staying on track

The plan only works if the total you pay stays fixed. The temptation, every time a debt clears, is to enjoy the lower minimums and spend the difference. Resisting that, and rolling the freed-up payment straight onto the next debt, is the single thing that makes the balance fall faster and faster towards the end.

A few habits help it stick. Set the minimums to pay automatically so none slips. Pay the target debt by standing order on payday, before the money can drift. Check the balances once a month so you can see them dropping, which is exactly the progress the snowball method is built around.

This article is about juggling several debts at once. The mechanics of a single debt live elsewhere: for why the credit card minimum is such a slow trap and how a 0% balance transfer fits in, see clearing credit card debt, and for how a personal loan's level monthly payment is worked out and what repaying early does, see how loan repayments work.

Common questions

Should I use the snowball or the avalanche method?

Both pay the minimum on every debt, then throw any spare cash at one debt until it clears. The snowball method targets the smallest balance first, so you get a quick win. The avalanche method targets the highest APR first, so you pay the least interest. As each debt clears, its old payment rolls onto the next one, which is what speeds things up.

Which method clears debt fastest?

The avalanche method, because clearing the highest-APR debt first stops the most interest building up. The snowball method usually costs a little more in interest and can take slightly longer overall. The gap depends on how far apart your interest rates are: the wider the spread, the more avalanche saves.

Should I save an emergency fund before paying off debt?

Most UK guidance suggests keeping a small buffer, often around £1,000 or a month of essential bills, before you start overpaying. Without it, one unexpected cost can send you straight back to the credit card you just cleared. Keep paying every minimum while you build the buffer, then put the surplus on the debt.

What happens if I only pay the minimum?

Paying only the minimum keeps the account in order but barely touches the balance, because most of the payment goes on interest. On a credit card the balance can take years and cost thousands extra. Paying a fixed amount instead, rather than the shrinking minimum, clears it far faster. We cover this in clearing credit card debt.

Does paying off debt this way hurt my credit score?

No. Clearing balances and keeping every minimum payment on time generally helps your credit record over time. Lower balances mean you are using less of your available credit, which lenders tend to view well. Missing a payment is what does the damage, so the minimums always come first.

What if I cannot afford the minimum payments?

If even the minimums are out of reach, this is a different situation and free help is available. StepChange, Citizens Advice and MoneyHelper give free, impartial debt advice and can talk through options. These figures are estimates to help you plan, not financial advice.

About this article

Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. We checked this article against MoneyHelper, Citizens Advice and StepChange. The worked example is modelled with our own debt payoff engine, which converts each APR to a true effective monthly rate, so the figures are estimates to help you plan, not financial advice. Real lenders charge interest daily and minimum payments usually shrink as a balance falls, so your own totals will differ. If you cannot keep up the minimums, free debt advice is available from those charities. Last updated June 2026.