30th July 2021 | 6 minute read

What is The Debt Snowball Method?

The debt snowball method is a debt repayment strategy you can use to reduce the number of individual balances you hold, quicker. It works by focussing your payments on areas with the lowest balance first, gradually decreasing the number of balances you have, and you can use this method to pay off any non-mortgage borrowing.

How Does The Debt Snowball Method Work?

Unlike the debt avalanche method, the debt snowball method works by directing all your surplus payments towards your lowest balance, gradually eliminating balances until you have just one left; the highest. To do this, you’ll need to first organise your debts from smallest to largest and then reduce all your payments to the minimum amount. Add up the savings you make doing that, and then pay that total amount, plus the minimum payment value, to your lowest balance.

Once that balance is paid in full, you then take that total payment amount and move it onto your next lowest balance, and so on. Using this method, you can reduce the number of different balances you have faster, allowing you to better manage your outgoings, close accounts sooner and become debt free.

Example of Debt Snowballing

Imagine you have 2 credit cards, 1 loan and 1 store card. Each has a different interest rate, and you don’t currently have enough extra money to pay any of them off in full.

With the debt snowball method, the amount you pay to each balance monthly reduces, dropping to the minimum amount due, and the money you save will instead all be paid towards the store card, then credit card 2, followed by credit card 1 until you’re left with just the personal loan left.

As you can see from the example above, the difference you save from dropping your payments to the minimum amount for both credit cards and the personal loan now goes towards paying off the store card, but you still pay the same amount each month altogether. In this example, the store card would be paid off in just 2 months, instead of the 8 months it would have taken, leaving you with 3 remaining balances to tackle.

It’s important to note that the example above doesn’t take into account interest rates but is used to demonstrate how changing the priority of your payment amounts can help clear balances faster. Even when you meet your minimum monthly payments, interest will continue to build until balances are paid in full. If you want to decrease the total interest you pay, the Debt Avalanche method might be better for you.

When Can I Start The Debt Snowball Method?

The earlier you begin taking control of your balances the better. No matter what method you use, the longer you wait, the more interest you’ll pay overall.

To begin using this method, first, you just need to make a note of your different balances and borrowing. Be honest with yourself, and take the time to understand what different interest rates you’re paying on each. Then, order them according to the size of the balance, smallest to biggest.

You can’t use this method on borrowing such as mortgages, which often come with specific conditions around when you can repay, and by how much. Similarly, if you have balances that come with changing interest rates (such as 0% for the first 2 years, and a higher rate after that period), you might be better using a different approach.

Should I Use The Debt Snowball Method?

As mentioned, there are lots of different ways of managing debt and the snowball method might work for you if you’re looking to do any of the following:

You want to appear more appealing to lenders

By paying off the smaller balances first, you can reduce your Debt to Income ratio (DTI) more quickly. This is one of the things that lenders typically look at when deciding if you can afford to borrow from them. The fewer balances you have, the more appealing and financially stable you’ll appear.

You want to reduce the number of balances you have overall

It’s easy to feel overwhelmed when you have a long list of credit cards or loan balances, and it can often lead to worry and poor mental health. Having fewer balances could help you feel more in control of your finances and less stressed.

You feel like no matter what you pay, you never seem to make a difference

It can be really hard to keep motivated when you don’t feel you’re making a difference to your overall balances. The debt snowball method works to keep you committed by allowing you to pay off your smallest balances quickly, helping you to feel like you’re making more progress.

The Pros & Cons of Debt Snowballing

Debt snowballing is just one way of managing your debt, and there are pros and cons to all methods.


  • You can reduce the total number of balances quicker, making your debt feel more manageable

  • As you begin to clear balances quickly, you’ll find it easier to keep motivated and keep going

  • It’s easy to begin and doesn’t require lots of maths calculations to do so


  • By focusing on your smallest balance first, rather than balances with the highest interest, you may end up paying more interest in total

  • Because you may be leaving higher interest borrowing until last, it could take you longer to clear all your balances overall

Debt Snowball FAQs

Q: Should I stop payments to my other balances, to help me pay off the lower ones faster?

A: It’s really important to always meet your minimum payments on balances, to avoid high interest rates and bad credit scores. Even if it’s a slower process, paying the minimum on all your balances will show lenders that you’re financially responsible and prevent you from paying unnecessary fees.

Q: Does debt snowballing really work?

A: If you struggle with motivation when it comes to reducing your borrowing, or you feel overwhelmed by the number of different payments you have to make, then the debt snowball method can help focus your efforts and keep you motivated.

Q: Wouldn’t it be better to pay off balances with higher interest rates first?

A: Paying off balances with higher interest rates first will reduce the interest you pay overall, but paying off your lowest balances first will help you reduce the number of balances you have faster. If your goal is to pay the least amount of interest possible, then the debt avalanche method might be more suited to you.

Q: What’s the difference between the debt snowball method and the debt avalanche method?

A: The debt avalanche method is where you focus on paying off the balances with the highest interest rates first. Both methods have their pros and cons, and the best option for you depends on your circumstances and personal goals.

Whether using the debt avalanche or debt snowball method, if you are using them to pay back credit card debt, you must stop spending on the credit card for it to work – you can’t pay down a balance that is still increasing. You may also need to think more carefully about any balances with 0% special offer periods as you will want to clear this before the interest rate goes up.

Feeling overwhelmed by your debts, or want to manage them smarter? ilumoni gives you personalised insight into your circumstances to help you borrow well. Get the app to see if you could save money by managing your borrowing differently.

If you're concerned about your finances or are struggling with debt, the organisations on our Debt Helplines page can offer you additional support or advice. 

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