Getting Out of Debt: The Order That Actually Works
Most people attack debt in the wrong order, on the wrong accounts, without ever checking which bills legally matter more. Here's the order that actually works.
By Firoz Khan|27 April 2026|Updated 20 September 2026|10 min read
Nobody explains the order of operations for getting out of debt, so most people just pay whatever letter arrived most recently or whichever balance feels most stressful. Neither is a strategy. Credit card companies and lenders have no incentive to tell you that paying the smallest debt first, or the highest interest rate first, or your council tax before your store card, changes how much you pay overall and how much legal trouble you avoid. There is a right order to work through this, and it starts before you pay anyone anything: with a full list.
List every debt and its interest rate first
Before you pay a penny extra anywhere, write down every debt you owe: who it's to, the balance, the minimum payment, and the interest rate (APR). Include credit cards, overdrafts, personal loans, buy-now-pay-later balances, and anything owed to family if it has terms attached. Most people avoid this step because it's uncomfortable to see the full number in one place, but you cannot make a good decision about which debt to prioritise until you can see all of them side by side. This list is the single most useful thing you can produce in this entire process, and it takes about 20 minutes.
Avalanche method: highest interest rate first
The avalanche method means paying the minimum on every debt except the one with the highest interest rate, which gets every spare pound you have until it's cleared, then you move to the next highest. Mathematically, this is the cheapest way to clear debt because you stop interest accruing on your most expensive balance first. A credit card at 29.9% APR is costing you far more per month than a loan at 8%, even if the loan balance is bigger, so clearing the card first saves the most money over the full repayment period. The downside is psychological: your highest-rate debt isn't always your smallest, so progress can feel slow at the start.
Snowball method: smallest balance first
The snowball method ignores interest rates and instead pays off the smallest balance first, regardless of rate, then rolls that payment into the next smallest. It costs more in interest over time than the avalanche method, but it produces a cleared debt faster, which for a lot of people is the difference between sticking with a repayment plan and giving up on it. If seeing one balance hit £0 keeps you motivated to keep going, the extra interest you pay is often a reasonable trade for actually finishing the plan rather than abandoning a mathematically perfect one three months in.
Worked example: the two methods compared
Say you owe £500 on a store card at 25% APR, £2,000 on a credit card at 22% APR, and £4,000 on a personal loan at 9% APR, with £300 a month free to put towards extra repayments on top of minimums.
Under avalanche, you'd attack the store card first (highest rate despite the smallest balance), then the credit card, then the loan. Total interest paid across the full repayment period comes out lowest this way, typically saving £150-£250 compared to snowball on a debt load this size, depending on exact terms.
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Under snowball, you'd also start with the store card here since it happens to be the smallest balance too, so in this particular case the two methods start identically. Where they diverge is the next debt: avalanche would move to the credit card (higher rate), snowball would move to whichever remaining balance is smallest. The gap in total cost widens the more your smallest and highest-rate debts differ.
Priority debts vs non-priority debts
Not all debts carry the same consequences for missing payments, and this matters more than interest rate when money is genuinely tight. Priority debts are ones where non-payment can lead to losing your home, having your utilities cut off, or facing criminal enforcement: mortgage or rent arrears, council tax arrears, gas and electricity bills, and court fines. Non-priority debts are credit cards, personal loans, and catalogue debts, where the worst outcomes are a damaged credit file, collections calls, and eventually County Court judgments, none of which can put you out of your home overnight. If you're choosing between paying your rent and paying your credit card minimum, pay the rent. This isn't about which lender shouts loudest, it's about which unpaid bill has the power to escalate fastest.
Negotiating with creditors directly
Creditors would rather agree a reduced payment plan than get nothing, and most will negotiate if you contact them before you miss a payment rather than after. Call or write explaining your situation and propose a reduced monthly amount you can actually sustain, sometimes with interest frozen for a set period. Many lenders have hardship teams specifically for this, and agreeing a formal reduced payment plan protects your account status better than silently paying less than the minimum or missing it altogether. Get any agreement confirmed in writing or email before you rely on it, since verbal promises from a call centre are hard to enforce later.
When to get free debt advice
If your debts total more than you could clear within about 3 years even on a tight budget, or you're already missing priority debt payments, it's time to speak to a free debt advice charity such as StepChange, National Debtline, or Citizens Advice, rather than trying to negotiate everything yourself. These services build a full budget with you, contact creditors on your behalf, and can set up formal arrangements like Debt Management Plans that are more consistent than DIY negotiation. None of this costs anything, and using it isn't a sign you've failed, it's a sign you're treating a multi-creditor problem with the structure it actually needs.
Build a small buffer even while repaying debt
It feels counterintuitive to save while you're in debt, but putting away even £20-£50 a month into a separate emergency buffer, alongside your repayments, is what stops the next unexpected bill from becoming new debt. Without a buffer, a £200 car repair or broken appliance goes straight back onto a credit card, undoing months of progress. A buffer of even £300-£500 breaks that cycle. This isn't about building a full emergency fund before you start paying off debt, it's about running a small one in parallel so a single bad week doesn't reset the whole plan.
Where people get this wrong
The most common mistake isn't picking avalanche over snowball or vice versa, it's paying non-priority debts before priority ones because the credit card company calls more often than the council does. Letters about council tax arrears and rent arrears can look routine right up until enforcement action starts, by which point the options are far worse. The second most common mistake is treating a debt repayment plan as a fixed, silent obligation rather than something you can renegotiate the moment your circumstances change. Creditors expect you to come back to them if things get harder, and ignoring letters instead of picking up the phone is what turns a manageable debt into a court judgment.
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