Two orderings dominate discussions of repaying multiple debts. They are usually presented as competing answers to one question, when they are answers to two different ones.
Both methods share the same structure
Each approach requires paying the minimum on every debt and directing all remaining capacity toward a single target until it clears.
When that debt is gone, the entire amount previously paid toward it moves to the next target, so the payment applied grows at each stage.
That escalation is the engine in both methods, and it matters more than the ordering, since a plan without it makes slow progress under either scheme.
The avalanche minimises interest
Targeting the highest rate first means the most expensive balance shrinks fastest, which reduces the total interest accrued across the whole set.
Arithmetically this is the optimal order, and no other sequence produces a lower total cost for the same payments.
The disadvantage is that the highest-rate debt may also be large, so the first clearance can take a long time and no account closes for many months.
The snowball optimises for continuation
Targeting the smallest balance first clears an account quickly, which reduces the number of obligations and produces visible progress early.
The gain is not psychological decoration. A plan abandoned in month four costs more than a slightly suboptimal plan sustained for three years.
Fewer accounts also means fewer minimum payments and fewer due dates, which reduces the chance of a missed payment and the charges attached to one.
Each closed account frees its minimum payment permanently, so the amount available for the next target rises faster in the early stages than under the alternative ordering.
The gap between them is often small
Where interest rates across the debts are similar, the two orderings produce nearly identical results and the choice hardly matters.
The difference widens when one debt carries a much higher rate than the rest, which is the situation where the avalanche's advantage becomes material.
Comparing the two for a specific set of balances takes a few minutes and converts an abstract debate into a concrete figure.
Some debts sit outside the ranking
Obligations with consequences beyond interest, such as those secured on a home or vehicle or those carrying enforcement powers, belong at the front regardless of rate.
Debts approaching the end of a promotional period also warrant priority, since the rate is about to change and the ordering was based on the old one.
Anyone whose total payments cannot cover minimums is in a different situation altogether, and that is a point at which independent debt advice is the appropriate step rather than a repayment ordering.