# Paying off the smallest debt first, and why it works
Author: Anita Desai
Author URL: https://demoatlas.superblog.click/author/anita-desai/
Published: 2026-07-11
Category: Debt
Category URL: https://demoatlas.superblog.click/category/debt/
Meta Title: Paying off the smallest debt first, and why it works · Atlas
Meta Description: The mathematically wrong order is often the one that gets finished. On the snowball, the avalanche, and being a person.
Tags: budgeting, debt, credit cards
Tag URLs: budgeting (https://demoatlas.superblog.click/tag/budgeting/), debt (https://demoatlas.superblog.click/tag/debt/), credit cards (https://demoatlas.superblog.click/tag/credit-cards/)
URL: https://demoatlas.superblog.click/paying-off-the-smallest-debt-first-and-why-it-works/

![A leather wallet on a wooden table](https://images.unsplash.com/photo-1637486069202-b1163268c240?ixid=M3w3OTAzOTJ8MHwxfHNlYXJjaHw1fHx3YWxsZXQlMjBjYXNoJTIwY2FyZHN8ZW58MXwwfHx8MTc4ODYzNTQ0MHww&ixlib=rb-4.1.0&w=1600&q=80&auto=format&fit=crop)

There are two ways to pay off several debts. One is right on paper. The other is right in practice for most people, and the gap between them is smaller than it looks.

## The avalanche

Pay the minimum on everything, then put every spare pound at the debt with the highest interest rate. This costs the least in interest. It is what a spreadsheet would do.

## The snowball

Pay the minimum on everything, then put every spare pound at the smallest balance. When it is gone, roll its payment into the next smallest. This costs a little more in interest and it clears a debt from the list quickly, which is the part that keeps people going.

## How big is the difference?

For a household with three or four debts at rates within ten points of each other, the snowball costs a few hundred more in interest over the whole plan. If the snowball is the plan you finish and the avalanche is the one you abandon in month five, the few hundred is the cheapest money you will ever spend.

## The one exception

A debt at a rate above thirty percent, a payday loan or an overdraft, goes first whatever its size. Interest at that rate outruns any psychological benefit.

## What both methods share

A fixed monthly amount, decided once, that does not change when a debt is cleared. The freed-up payment moves to the next debt. That is the whole mechanism, and it works under either name.


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