The debt avalanche method pays off debts from highest interest rate to lowest, regardless of balance. You pay minimums on all debts and put every extra pound toward the highest-rate debt first. This approach is mathematically optimal—it minimises total interest paid and often results in the fastest debt-free date.

If you want to pay the least interest possible, avalanche is the answer.

The maths is simple: high-interest debt costs you more each month than low-interest debt. Eliminate the expensive debt first, and you stop the bleeding.

But "mathematically optimal" and "practically achievable" aren't always the same thing. This guide covers how avalanche works, when it's the right choice, and the UK-specific considerations that affect your calculations.

What Is the Debt Avalanche Method?

The avalanche method is a debt payoff strategy that prioritises cost reduction over quick wins.

The core principle: Pay off your highest interest rate debt first, then roll that payment to your next highest rate, regardless of balance size.

The Three Rules

List debts by interest rate, highest to lowest (ignore balances)
Pay minimums on all debts
Put all extra money toward the highest-rate debt

When the highest-rate debt clears, take that entire payment and add it to your next highest rate. Continue until all debts are cleared.

Why "Avalanche"?

Imagine an avalanche. It starts at the peak - highest point - and gains momentum as it descends.

Your debt payments work similarly. You start at the peak (highest interest rate). As each debt clears, your payment power grows and crashes through the rest faster.

How Avalanche Works: Step-by-Step

Step 1: List Debts by Interest Rate

Order from highest to lowest rate. Balance doesn't matter yet.

Important for UK users: Don't mix up EAR and APR. Your 39.9% EAR overdraft and 39.9% APR credit card have different actual monthly costs. A proper comparison requires converting to equivalent rates.

Example debts:

Store card: 39.9% APR
Overdraft: 39.9% EAR (actually lower monthly cost than 39.9% APR)
Credit card A: 24.9% APR
Personal loan: 9.9% APR

Step 2: Identify Minimum Payments

Store card: £22/month
Overdraft: £50/month
Credit card A: £75/month
Personal loan: £120/month

Total minimums: £267/month

Step 3: Calculate Extra Money

Your total budget minus minimums equals extra payment.

Budget £400/month: £400 - £267 = £133 extra

Step 4: Attack Highest Rate First

All £133 extra goes to the store card (highest APR):

Store card: £22 + £133 = £155
Overdraft: £50
Credit card A: £75
Personal loan: £120

Step 5: Roll Over When Cleared

When the store card is paid off, that payment rolls to the next highest rate (overdraft):

Overdraft: £50 + £155 = £205
Credit card A: £75
Personal loan: £120

Step 6: Continue to Completion

Each cleared debt accelerates the next. Your final debt receives the combined power of all previous payments.

Real UK Example: Complete Avalanche Calculation

Debt	Balance	Rate	Type	Monthly Cost*
Next Store Card	£1,800	34.9%	APR	2.91%
HSBC Overdraft	£1,200	39.9%	EAR	2.84%
Barclaycard	£3,400	22.9%	APR	1.91%
Car Finance	£5,600	8.9%	APR	0.74%

*Monthly cost = monthly interest rate equivalent

Critical insight: The 34.9% APR store card has a HIGHER monthly cost (2.91%) than the 39.9% EAR overdraft (2.84%). This is why UK users need a calculator that handles both rate types.

Example:

Total debt: £12,000

Total minimums: £320/month

Budget: £500/month

Extra for target debt: £500 - £320 = £180/month

Avalanche Order (Highest Actual Rate First):

Next Store Card (34.9% APR = 2.91% monthly)
HSBC Overdraft (39.9% EAR = 2.84% monthly)
Barclaycard (22.9% APR = 1.91% monthly)
Car Finance (8.9% APR = 0.74% monthly)

Timeline:

Months 1-10: Store Card receives £225/month

Cleared: Month 10 ✓

Months 11-17: Overdraft receives £275/month

Cleared: Month 17 ✓

Months 18-31: Barclaycard receives £360/month

Cleared: Month 31 ✓

Months 32-42: Car Finance receives £500/month

Cleared: Month 42 ✓
Debt-free: June 2029

Total Interest Paid (Avalanche): £2,847

Calculate your specific avalanche timeline →

The Mathematics: Why Avalanche Saves Money

Interest Accumulates Daily/Monthly

Every month, your debts grow by their interest rate. A £2,000 debt at 30% APR adds ~£50/month in interest. A £2,000 debt at 10% APR adds ~£17/month.

By killing the 30% debt first, you stop that £50/month bleed faster.

The Compound Effect

Interest charges compound. If you can't pay off all the interest each month, you pay interest on interest.

Higher-rate debts compound faster. Eliminating them early stops interest from piling up against you.

Worked Comparison

Scenario: £6,000 total debt, £300/month budget

Debt A: £2,000 at 35% APR Debt B: £4,000 at 15% APR

Avalanche (A first):

A cleared: Month 8
B cleared: Month 24
Total interest: £1,287

Snowball (A first anyway—smallest):

Same as avalanche here

If reversed (B = £2,000 at 15%, A = £4,000 at 35%):

Avalanche (A first—highest rate):

A cleared: Month 16
B cleared: Month 24
Total interest: £1,623

Snowball (B first—smallest):

B cleared: Month 8
A cleared: Month 25
Total interest: £1,891

Savings from avalanche: £268

Avalanche vs Snowball: Head-to-Head

Using the £12,000 example above:

Factor	Avalanche	Snowball
Debt-free date	June 2029	August 2029
Total interest	£2,847	£3,241
First debt cleared	Month 10	Month 7
Savings	£394	—

The trade-off: Avalanche saves £394 but waits 3 months longer for first win.

Is £394 over 3.5 years (£9.40/month) worth potentially slower motivation? That's a personal decision.

When Avalanche Is the Right Choice

You're Motivated by Optimisation

If knowing you're saving money motivates you more than quick wins, avalanche is your method.

One Debt Has a Much Higher Rate

If your store card is 40% and everything else is 15-20%, pay the store card first regardless of balance. The rate gap is too significant to ignore.

You're Patient and Disciplined

Avalanche sometimes means waiting 12+ months for your first cleared debt. If you can sustain effort without visible wins, avalanche rewards your patience.

Rates Vary Significantly

The more your rates differ, the more avalanche saves. Similar rates = similar results regardless of method.

You Have Few Debts

With just 2-3 debts, the psychological difference between methods is minimal. Might as well optimise.

When Avalanche Might Not Work

You've Failed Before

If you've tried structured debt payoff and quit, you might need snowball's quick wins to build momentum.

Your Highest-Rate Debt Is Largest

If your £8,000 credit card at 30% is your biggest debt, avalanche means potentially 18+ months before clearing anything. That's psychologically brutal.

You're Feeling Overwhelmed

When debt feels crushing, any progress matters more than optimal progress. Clear something small first to prove you can do this.

A 0% Deal Ends Soon

If you have a 0% balance transfer that reverts to 24.9% in 6 months, that timing might override pure rate-based ordering.

UK-Specific: EAR vs APR in Avalanche

This is critical for UK users.

The Problem

Your overdraft shows 39.9% EAR. Your credit card shows 34.9% APR. Which costs more?

Wrong assumption: 39.9% > 34.9%, so overdraft costs more.

Reality: APR and EAR use different calculation methods.

Rate	Type	Formula	Monthly %
39.9%	EAR (overdraft)	(1.399)^(1/12) - 1	2.84%
34.9%	APR (card)	34.9 / 12	2.91%

The 34.9% APR credit card costs MORE per month than the 39.9% EAR overdraft.

The Solution

Use a calculator that handles both rate types and compares them correctly. DebtRiot asks which rate type each debt uses and applies the appropriate formula.

Starting Your Avalanche Today

1. Gather Your Debts

For each debt, note:

Balance
Interest rate
Rate type (APR or EAR)
Minimum payment

2. Convert to Comparable Rates

Use a calculator that handles EAR/APR conversion, or manually convert:

APR to monthly: divide by 12
EAR to monthly: (1 + rate)^(1/12) - 1

3. Order by Actual Monthly Cost

Highest monthly rate first—this is your avalanche order.

4. Execute

Minimums on everything except highest rate
All extra on highest rate
Roll over when cleared

5. Track Progress

Check monthly. Watch balances drop. Celebrate when debts clear.

Calculate Your Avalanche

See exactly how much avalanche saves for your specific debts.

Open DebtRiot →

Enter UK debts (handles EAR + APR correctly)
Compare avalanche to snowball (plus 3 more strategies)
See your debt-free date
Know your exact savings

Free comparison and 3-months preview. No signup. Ready in minutes.

Frequently Asked Questions

The debt avalanche pays debts highest interest rate to lowest, regardless of balance. You pay minimums on all debts and put extra money toward the highest rate. When it clears, roll that payment to the next highest rate. This minimises total interest paid.
Savings depend on your debts. For typical UK scenarios (£5,000-10,000 debt), avalanche saves £50-400 over 2-3 years. The gap widens when one debt has a much higher rate than others. Calculate your exact savings →
Avalanche saves more money. Snowball provides faster wins. "Better" depends on what keeps you motivated. Research shows people often quit avalanche because early progress feels slow. The best method is the one you'll actually finish.
Convert both to monthly rates. APR monthly = APR ÷ 12. EAR monthly = (1 + EAR)^(1/12) - 1. Or use a UK calculator that handles both automatically. DebtRiot does this conversion for you.

DebtRiot is a calculation tool, not financial advice. For debt help contact: StepChange, National Debtline or Citizens Advice.

Debt Avalanche Method UK: The Complete Guide to Saving Maximum Interest