With more than one debt, every payment above the minimum is a choice about where it goes. Two methods answer that question, and they answer it differently.
The avalanche puts every spare payment against the debt with the highest interest rate while the others get their minimum. When it clears, the whole spare amount moves to the next highest. It costs the least in interest, because the most expensive money is repaid first. On arithmetic alone it wins every time.
The snowball puts every spare payment against the smallest balance instead, whatever its rate. The first debt disappears sooner, often much sooner, and the payment it was taking joins the next one.
The snowball usually costs a little more in interest. It also finishes things, and a list getting shorter is easier to keep going with than a list getting cheaper.
The best method is the one still running in month nine.
Both rest on the same two conditions: the minimum is met on every debt, and the spare amount is really spare rather than borrowed back later in the month.
Mixing them is fine. Clearing one small balance first for the relief of it and then switching to the highest rate is not a compromise, it is a plan.
Whether to overpay at all, rather than hold the money, depends on the rate, on whether there is a charge for repaying early, and on what else the money would be doing. Where the figures are close and the amounts are large, that is a fair thing to take to a licensed adviser.
General information about how money works, not advice. What is right for you depends on your own situation, and a licensed professional can look at that with you.
Peeka carries this piece too, under Insights and Learn, with the examples in your own currency. Read it in the appGet the app
