The two methods in one sentence each
- Avalanche: pay every minimum, then put all extra money on the debt with the highest interest rate.
- Snowball: pay every minimum, then put all extra money on the debt with the smallest balance.
In both, when a debt is cleared its minimum payment rolls into the next one, so the amount attacking your debt grows over time.
Worked example
Three debts and PKR 15,000 a month extra on top of the minimums:
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Credit card | PKR 240,000 | 42% | PKR 12,000 |
| Bike instalments | PKR 180,000 | 0% | PKR 9,000 |
| Personal loan | PKR 100,000 | 18% | PKR 6,000 |
| Avalanche | Snowball | |
|---|---|---|
| Order | Credit card → Personal loan → Bike instalments | Personal loan → Bike instalments → Credit card |
| Debt-free in | 1 year 2 months | 1 year 3 months |
| Total interest | PKR 65,954 | PKR 101,289 |
| Saved vs minimums only | PKR 129,963 | PKR 94,628 |
Avalanche goes after the 42% credit card first and pays PKR 35,335 less interest. Snowball starts with the smallest balance, the personal loan, so the expensive card keeps charging 42% for longer. Snowball’s reward is an earlier first win: one debt gone and one less payment to think about.
So which should you choose?
- If one debt is much more expensive than the rest (credit cards often are), avalanche usually saves real money.
- If your rates are similar, the difference is small, and the quick wins of snowball may keep you going.
- Whichever you choose, the biggest lever is the extra amount. Find it in your budget and keep it constant.
Run your own debts through the debt payoff calculator: it shows both methods side by side.