Deep Dive


Emma Nunes-Vaz
January 16, 2024

The first repayment strategy we'll be exploring in this series is the snowball method.

What is it?

The snowball method focuses on disregarding interest rates and simply paying off your smallest debt as quickly as possible, whilst paying the minimum amount required on all your other debts. When you’ve paid off the smallest debt, you put the extra funds available towards what was the second smallest debt - essentially “snowballing,” your repayment toward the next balance. And so on, and so on. With time you’ll have eliminated your smaller debts and moved on to the bigger balances. 

The pros

Paying off a debt - however small - can be a big morale boost; giving you the sense of progress and the impetus you need to keep motivated. It’s more straightforward in that you don’t need to compare interest rates and APRs; rather just looking at the sum total of each debt. What’s more, it may also help you get a better handle on your finances and financial stress overall. As you’re focusing on one debt balance at a time, this method can alleviate worries about how to tackle all of your debt at once.

The cons 

As you’re only paying back the minimum on your other debts and your most costly debt will be paid off last, you’re going to incur more interest compared to other methods, meaning it’ll cost you more in the long run. And, with higher interest rates, it’s also likely to take you longer to become debt-free.

This method isn't for everyone, but for some it's the perfect fit. The good news is it'll be available in our Incredible app, where we'll help you decide which method is best equipped to help you on your debt-free journey, and where we'll do all the hard work for you!