Paying off debt can feel overwhelming, especially when you're dealing with multiple loans at once, from credit cards and renovation loans to student loans and more. The debt avalanche method is a smart, interest-saving strategy that helps you reduce your total debt by tackling the most expensive ones first.

In Singapore, where the average credit card interest rate hovers around 25% per annum, high-interest debt can quickly snowball. According to MAS statistics, the household debt-to-GDP ratio in Singapore stood at around 65% in recent years, one of the highest in Asia. That means many Singaporeans are dealing with more than one form of debt.

The biggest benefit of the debt avalanche method? You’ll pay less in interest over time. It’s a great fit for those who are detail-oriented, financially disciplined, and focused on long-term goals.

When it comes to debt repayment strategies, two popular methods often come up: the debt avalanche and the debt snowball. Both can work, but they serve different mindsets.

What is the debt avalanche method?

The debt avalanche method prioritises paying off the debt with the highest interest rate first—not the highest balance. The idea is simple: by getting rid of the most expensive debt first, you reduce the total interest paid over time.

Let’s say you’re paying 25% p.a. on a credit card and 5% on a student loan. Even if the student loan is bigger, you’ll save more money by clearing the credit card first.

This method works best when you’re focused on long-term savings, even if the results aren’t immediately obvious. It’s particularly effective for Singaporeans with large credit card balances or high-interest personal loans.

» Learn about more ways you can pay off your debt

What is the debt snowball method?

In contrast, the debt snowball method is all about psychological wins. You start by paying off your smallest balance first, regardless of the interest rate. As you clear each debt, you feel a sense of achievement, which helps you stay on track.

This can be helpful if you’re feeling overwhelmed by debt and need fast progress to stay motivated. For example, if you’ve got a $500 BNPL bill and a $5,000 personal loan, you’d clear the $500 one first.

However, because it ignores interest rates, this method could cost you more in the long run. It’s best suited for Singaporeans who value visible progress more than mathematical efficiency.

Here’s how to get started with the debt avalanche method:

1. List all your debts—credit cards, personal loans, student loans, renovation loans, etc.

2. Arrange them in order of interest rate, from highest to lowest.

3. Make minimum payments on all debts, so you don’t incur late fees.

4. Channel any extra funds to the debt with the highest interest rate.

5. Once that debt is paid off, move on to the next-highest interest debt, using the same strategy.

For example, if you have a DBS credit card charging 25% interest, a POSB renovation loan at 8%, and an education loan at 4.5%, you’ll start with the credit card.

This method takes discipline. Unlike the snowball method, the early wins aren’t always visible, but the long-term savings are worth it.

» Learn how to budget your money

Let’s say you’ve got the following debts:

• DBS Credit Card: $3,000 at 25% interest

• Renovation Loan (POSB): $10,000 at 8% interest

• Student Loan: $5,000 at 4.5% interest

If you follow the avalanche method, you’ll focus on the DBS credit card first. Even though it’s not your largest balance, it’s the most expensive in terms of interest. Once that’s cleared, you’ll move on to the renovation loan, then the student loan.

Compared to the snowball method, where you’d start with the smallest balance ($3,000) regardless of interest, the avalanche method ends up saving more money. Over the course of repayment, you could cut down on hundreds (or even thousands) in interest payments.

The debt avalanche method works best if you’re:

• Patient and focused on long-term results

• Comfortable managing multiple debts simultaneously

• Dealing with high-interest debts, like credit cards or payday loans

• Confident using tools like budgeting apps or online banking

That said, it may not be ideal if you need immediate motivation. If you feel discouraged without seeing quick wins, the snowball method could be better.

Some Singapore banks offer balance transfer plans or no-fee refinancing. Pairing these with the avalanche method can speed up your progress while reducing costs.

» Learn how to stay on top of your repayments

If you’re struggling to repay unsecured loans within five years, it might be time to explore your debt relief options.

Here’s how to stay consistent with the avalanche method:

• Use a debt repayment calculator to track how much you’re saving in interest

• Set up automated payments so you never miss a due date

• Celebrate small wins — like when you completely pay off one high-interest loan

• Combine it with the 50/30/20 budgeting rule to manage your spending

With commitment, planning, and the right tools, the debt avalanche method can help you break free from debt and keep more of your hard-earned money in your pocket.