What is the debt snowball method in simple terms?

The debt snowball method is an approach to repaying your debts where you focus on paying off your smallest debts first. You pay the minimum payment on your debts and then use any spare money to pay towards the smallest debt you still owe. This means that the number of debts that you have should start reducing quickly, helping you build momentum towards clearing your other debts.

The snowball method should only be used if you can afford the minimum payments on your debts. If you are struggling to meet payments or have already fallen behind, get free expert advice from National Debtline instead.

How the debt snowball method works step by step

The starting point for dealing with your debts should always be creating a realistic budget for your household. Check your bank statements and bills to make sure your budget is accurate. Don’t forget to include amounts for occasional costs such as car and home repairs, gifts and clothing. It is a good idea to also set some money aside for unexpected emergencies. If you are not sure if your spending is realistic, get free help from a National Debtline adviser.

Any money left over after you have paid your bills and other living costs can be used to repay your debts. Make sure you have arrangements in place to meet the minimum payments due on each of your debts. Put the surplus money from your budget towards the smallest debt you have. Keep doing this as each debt is paid off, always switching to the next smallest.

If you find you haven’t got any money left over on your budget or haven’t got enough money left to meet all your minimum payments, do not use the snowball method. Speak to a National Debtline and get free expert advice about debt solutions instead. To find out more about the solutions that may be available, see our Ways to clear your debt guide.

Example of the debt snowball method

Here’s how you would use the snowball method if you had the following debts.

The total of the monthly minimum payments here is £235.

• If you had £300 left over on your budget, you would have £65 left after paying the £235 of minimum payments.
• This spare £65 would be paid towards the catalogue debt as this is the smallest.
• So, you’d pay £100 (£35 + £65) rather than just £35 towards this debt.
• Once the catalogue debt is cleared, you’d start paying the £100 towards the overdraft debt.

Why do some people choose the debt snowball method?

The snowball method is likely to appeal more if you have tried to clear your debts in the past, but struggled to stick to a plan as results take to long.

The drawback to the snowball method is that you are choosing what to pay based on the size of the balance rather than the rate of interest. Higher-interest debts grow more quickly, so you’d usually save money if you pay these down first instead.

Debt snowball vs debt avalanche method

The debt avalanche method is a different approach to repaying your debts. With the avalanche method you instead choose to use any spare money to repay the debt with the highest interest rate. This will usually save you money compared to the snowball method, but it may take longer to pay off your first debt completely.

See our article about the debt avalanche method to find out more.

Is the debt snowball method right for you?

The snowball method may be worth choosing if you:

• can afford to meet the payments on your debts;
• have money left over to pay things back more quickly; and
• find it hard to get and stay motivated when you are trying to clear your debts.

If motivation isn’t an issue, you should consider the debt avalanche method too. The avalanche method is likely to be cheaper and quicker overall.

Tips to make the debt snowball method work

The key to repaying your debts is having a realistic budget and then sticking to it.

• Complete your budget carefully. If it isn’t accurate, you won’t be able to stick to it.
• Budget an amount for costs that come around occasionally. For example, insurance policies and Christmas gifts.
• Avoid taking out more credit.

Get free debt advice

National Debtline has been giving free professional debt advice for over 30 years. Call 0808 808 4000 to get expert guidance to help you deal with your debts.