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Derin Clark

Derin Clark

Online Reporter
Published: 28/01/2020

The ‘snowball’ method has gained momentum as a way for those in debt to repay the money they owe, but with its increasing popularity, we take a look at how effective this method of repaying debt really is.

What is the snowball method?

For those who have not heard of the snowball method, it advises those in debt to pay off the smallest debt first, then the next smallest and so on, with the largest debt being repaid last. This method goes against the traditional method of repaying the largest debt first, with the smallest debt being repaid last. Borrowers will need to repay the minimum amount required on all of their debts while paying extra for the smallest one.

The idea behind the snowball method is that by paying off the smallest debt first, the debtor will feel a sense of satisfaction and achievement, which will help to keep them motivated to continue repaying their debts.

The cost of the snowball method

While the snowball method may provide a psychological boost to those in debt, in the long-term it may cost them more to repay their debts. Often the largest debt will also be the one that is charging the most in interest per month, even if it is charging the same APR as the smallest debt. As such, tackling the largest debt first will likely result in paying less interest overall.

For example, if someone owes £5,000 on one credit card and £1,000 on another, both charging the average APR of 24.9%, and they pay £200 plus the minimum monthly payment each month, this would result in the £5,000 debt being paid off in two years with £1,047 in interest being added during that time. Making the same repayments, the £1,000 debt will take just six months to clear and will charge £55 in interest.

While on the surface paying off the lowest amount first might seem more attractive, consumers have to keep in mind that interest will be continued being added to both debts. Just repaying the minimum amount on the £1,000 credit card debt at a 24.9% APR will take 19 years and four months to clear, during which time £1,655 in interest will be added. The £5,000 debt will take 32 years and eight months to clear, during which time a staggering £9,135 in interest will be added.

Commenting on the impact of interest on debt repayment, Rachel Springall, finance expert at, said: “It’s vital that consumers weigh up not only the amount of debt they have, but the different types of interest that may apply. It may provide some mental wellbeing to clear smaller debts first, but this might not be the best choice financially. Borrowers would be wise to make more than the minimum repayments on any debt they amass, as making only the minimum repayment can leave debts overhead for a long time.”

No one-size fits all approach

Saying this, the debt advice charity, StepChange, believes there is not a one-size fits all approach to repaying debts and that those in debt should seek help to calculate the best way of repaying debts that works best for their individual circumstances. One reason for this is because not all debt is equal, for example, those in mortgage arrears will likely want to tackle this debt first as no matter the size of the debt, the repercussions of not repaying it will usually be far more serious compared to most other debts.

Sue Anderson, head of media at StepChange Debt Charity, added: “If you’re struggling with your finances, you would likely benefit most from the kind of structured debt advice many charities, such as StepChange, provide.”


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