Warning: Late repayment can cause you serious money problems. For free, impartial debt advice, visit
moneyhelper.org.uk.
Warning: Late repayment can cause you serious money problems. For help, go to
moneyhelper.org.uk.
The Two Established Strategies
When addressing multiple credit balances, two dominant methods exist in personal financial planning:
- The Avalanche Method: Paying minimums across all debts while throwing every excess pound at the balance with the highest APR. This approach minimizes total interest paid.
- The Snowball Method: Directing excess payments toward the smallest absolute balance first, regardless of interest rate. The quick elimination of individual accounts builds motivational momentum.
Which Approach Works Best?
While the Avalanche strategy is mathematically superior, empirical behavioral finance studies demonstrate that the Snowball strategy yields higher completion rates among individuals who need positive reinforcement during multi-month repayment plans.
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