Two ways to order the same debts
Start with the bill that is hard to pay.
Read the full details
Two ways to order the same debts
FCAC describes both highest-rate and lowest-balance approaches. With all else equal, directing extra repayment to higher-rate debt reduces interest more efficiently. Paying a small balance first can provide a visible milestone. Neither method is a creditor agreement, and neither changes a contractual payment on its own.
| Method | First target | Main tradeoff |
|---|---|---|
| Snowball | Smallest balance | Earlier account payoff may cost more interest |
| Avalanche | Highest rate | Interest efficiency may produce a slower first milestone |
How are they different?
See what is the same and what is not.
Read the full details
A simple example shows the difference
Imagine three unsecured balances: $500 at 12%, $2,000 at 24% and $4,000 at 19%. After making the required payments, you have $150 extra. Snowball puts that extra toward the $500 account. Avalanche puts it toward the 24% account. This is an ordering illustration, not a payoff forecast: actual interest, payments and future activity would be needed to calculate a finish date.
What should you ask?
See what to have ready and what to ask.
Read the full details
Deal with urgent priorities before optimizing
A collection deadline, overdue housing bill or essential service at risk cannot be reduced to an interest-rate ranking. Separate those issues from routine extra-payment choices and seek appropriate help promptly. Also note promotional rate expiry dates and any contractual restrictions. The spreadsheet order is useful only if it reflects the obligations you actually face.
What should you ask?
See what to have ready and what to ask.
Read the full details
If there is no extra money, change the question
If required payments do not fit after essentials, switching repayment order will not manufacture a surplus. Prepare a budget and ask about repayment assistance or a professional assessment of your options. Do not label yourself unsuccessful because a method designed for someone with spare cash does not fit your current position.
What to have ready
- Each balance and interest rate.
- The required payment on each account.
- Any overdue or urgent issue.
- An extra-payment amount you can sustain without reborrowing.
You do not need account numbers, your SIN, bank passwords, or files to start.
Can I switch methods?
Yes, a personal repayment priority is not a permanent commitment. Review what changed, continue meeting your agreements, and avoid moving money between strategies so often that no balance makes progress.