If you’re trying to pay off debt, knowing where to start can feel like a mountain in itself. The debt avalanche method is one of the most efficient ways to bring that balance down, fast.
Here’s how it works, why it could help you save money and how to get started.
How does the debt avalanche method work?
The avalanche method is all about focusing on the payments with the highest interest. You make the minimum payment on all of your debts, then put any extra cash you’ve got towards the one with the highest interest rate – the reason being that you stop paying high interest asap.
Once that’s cleared, you move to the next highest. You keep going until everything is paid off.
It’s the opposite of the snowball method, which focuses on clearing the smallest balances first. Avalanche takes longer to feel like progress, but usually costs less overall.
Why use the avalanche debt method?
You’ll save money on interest: By tackling the most expensive debt first, you reduce how much you pay in total.
You’ll likely pay off debt faster: Less interest means more of your payments go towards reducing what you owe.
It’s based on logic, not just feeling: It’s a smart choice if your goal is long-term savings rather than quick wins.
What are the downsides?
It can be demotivating: If your highest-interest debt is also your biggest, it may take a while to see progress.
It takes discipline: You need to stick to the plan and avoid adding new debt as you go.
Avalanche vs snowball
The winner depends on what keeps you motivated. If seeing progress quickly helps you stay on track, snowball might work better. But if your driving force comes from saving money and paying off debt efficiently, avalanche is the way to go.
You could also rip up the rule book and combine them. Start with avalanche, then switch to snowball if you need the high of a quick win to keep you going.
How to do it: step-by-step
List your debts: Include balances, interest rates and minimum payments.
Identify the one with the highest interest rate: This is your priority, no matter the size.
Keep making minimum payments on everything: This avoids late fees and protects your credit score.
Put any extra money towards the highest-interest debt: Even £20 more a month helps.
Once it’s cleared, move to the next highest: Keep going until you’re debt free.
Example:
- Credit card A: £2000 at 21% APR
- Credit card B: £1000 at 16% APR
- Loan: £3000 at 8% APR
In this case, you’d focus on Credit card A first, then Credit card B, then the loan – regardless of balance size.
How Zilch fits in
Chances are, you’ve got some paying off to be getting on with. And all that can easily be interrupted when an unexpected expense crops up. Not if you turn to Zilch though. Because for the love of your bank balance, no more interest – fees may apply.
Pay over 6 weeks: spread out purchases into four interest-free payments instead of relying on high-interest credit cards. Fees may apply.
Pay over 3 months: just like 6 weeks, but 3 months. Feel the hit even less with more time. Fees may apply.
Quick note: both Pay over 6 weeks and Pay over 3 months are credit offerings – if you don’t repay them right (on time, or at all) then you could negatively impact your credit file.
Pay now and earn up to 5% back in Zilch Rewards: use your Rewards towards future purchases, helping you stay on budget.
Built-in reminders and clear due dates: It’s easy to manage your payments in the app, we send handy reminders and automatically take your instalments from your linked bank account, so it’s one less thing to worry about.
Snooze: Want to buy a little time? You can Snooze payments for up to 8 days – just make sure you hit that Snooze button 24 hours before your payment is due.
Used responsibly, Zilch can help you avoid high-interest debt altogether – meaning less to avalanche through later.