Drowning in Debt? Snowball vs Avalanche vs Consolidation — Which Strategy Works Best
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When you have multiple debts — credit cards, personal loans, store accounts — the question is not whether to pay them off, but in what order. The three main strategies each have trade-offs between mathematical optimality and psychological momentum.
Avalanche: Highest Rate First
Pay minimums on everything, then throw all extra money at the highest-interest debt. Once that is cleared, roll its payment into the next highest rate. This saves the most money in total interest — it is mathematically optimal. But it can feel slow if your highest-rate debt also has the largest balance.
Snowball: Smallest Balance First
Pay minimums on everything, then attack the smallest balance. Once cleared (quickly), roll that payment into the next smallest. The psychological wins of eliminating debts keep you motivated. You pay slightly more in total interest, but completion rates are higher.
Consolidation: One Lower-Rate Loan
Replace multiple debts with a single loan at a lower rate. This simplifies payments and can reduce total interest — but only if the new rate is genuinely lower AND you do not extend the term. The danger: people consolidate, then run up their cleared credit cards again.
Warning: Debt Review
If you cannot service your debts at all, NCA debt review (debt counselling) is a legal process that restructures your payments and protects you from legal action. It is not a failure — it is a lifeline. Contact a registered debt counsellor via the NCR.