The debt snowball method is a debt repayment strategy that focuses on paying off your smallest debt first, while maintaining minimum payments on all others. Once the smallest balance is cleared, you roll the amount you were paying into the next smallest debt — like a snowball gathering size and speed.

This approach is less about numbers and more about motivation. By achieving small victories quickly, you stay encouraged and disciplined throughout your debt repayment journey.

The debt snowball method is a simple but powerful debt repayment strategy designed to help you build confidence as you go. Rather than focusing on interest rates, it prioritises paying off your smallest debt first, regardless of the cost.

The idea is to create early wins — clearing your first balance quickly gives you a sense of accomplishment. That psychological boost can be a game changer, especially if you’ve been feeling stuck or overwhelmed. As each small debt disappears, your motivation grows, making it easier to stay on track and tackle larger debts with renewed energy.

It’s a method that turns progress into fuel — and that’s often exactly what people need to stay consistent on the journey to becoming debt-free.

» Learn 4 ways you may be accumulating credit card debt without knowing it

How it works: A step-by-step breakdown 

1. List your debts from smallest to largest

This means ignoring interest rates and simply organising your balances from the lowest amount owed to the highest. This makes it easier to achieve early wins.

2. Make minimum payments on all debts

Keep all accounts current by continuing minimum payments, even as your focus shifts to one target debt.

3. Channel extra cash into your smallest debt

Any surplus income — from side gigs, bonuses or budget cutbacks — should go toward your smallest outstanding balance.

4. Roll over payments to the next debt

Once your smallest debt is paid off, apply the full amount you were paying to the next debt on the list. Repeat this until you're debt-free.

Why it works: The psychology behind small gains to big wins

The satisfaction of clearing a debt — even a small one — creates a sense of progress that motivates you to continue. These psychological wins help many stay on track, especially when financial goals feel distant or unattainable.

Does it work in Singapore?

This method works particularly well in Singapore, where many people juggle multiple unsecured loans — such as credit cards, personal loans, and hire purchase agreements. If you're managing a mix of smaller debts, the snowball method can simplify your repayment journey and help you stay focused.

Debt snowball in action: A local example

Let’s look at how a typical Singaporean might apply the debt snowball method:

Debts:

• Credit card: S$3,000

• Personal loan: S$5,000

• Car loan: S$12,000

You would first pay off the S$3,000 credit card while maintaining minimum payments on the personal and car loans. Once the credit card is cleared, you'd roll that monthly payment into the personal loan repayment — and then repeat for the car loan.

A debt management method tailored to Singaporeans

One key advantage of the debt snowball method — particularly for Singaporeans — is that credit card debts, which often come with some of the highest interest rates (up to 26% per annum), are typically among the smallest in terms of balance. This means they’re usually the first to be paid off in the snowball sequence, allowing you to eliminate costly interest early on.

More importantly, the method’s structure helps break down what feels like a mountain of debt into smaller, achievable steps. By focusing on one debt at a time, it reduces mental overload and makes the repayment journey feel less intimidating — which is especially helpful in Singapore’s fast-paced, high-cost environment.

Our local financial landscape

Credit card interest rates in Singapore can be as high as 26% per annum. Although the snowball method doesn’t prioritise high-interest debts, starting with credit cards often checks both boxes — they're usually among the smallest and most expensive.

By steadily knocking off smaller debts, Singaporeans can reduce mental load, avoid default penalties, and feel more confident about handling their larger obligations.

How to speed up your snowball progress

There are smart ways to accelerate your debt snowball strategy beyond just making payments.

Negotiate lower interest rates

Call your credit card issuer or bank to request a rate reduction, especially if you’ve been a reliable customer. Alternatively, consider using a balance transfer card with low or 0% interest for a limited period to manage high-interest debt more efficiently.

Explore debt consolidation plans (DCPs)

Singaporean banks like DBS, OCBC, and UOB offer DCPs that combine your unsecured debts into a single loan with lower interest. While this won’t follow the snowball strictly, it may make monthly payments more manageable and reduce overall cost.

» Compare debt consolidation plans in Singapore 2025

Set up automatic payments for at least the minimum due on each debt to avoid missed payments or late fees — a common reason people fall behind.

Put windfalls to work

A slew of financial aids were rolled out at Budget 2025, such as SG60 Vouchers, assurance packages, CDC top-ups and more, so make use of them! Any unexpected money should be funnelled into your current target debt. Even small increases in monthly payments (e.g., S$50–S$100) can significantly shorten your debt-free timeline.

» Discover key takeaways from Budget 2025

Is the snowball method right for you?

It depends on your goals and personality. If you struggle with motivation or feel discouraged by slow progress, this method can be a game changer.

But it’s not for everyone.

Comparing snowball and avalanche methods

The debt snowball approach focuses on paying off debts from the smallest balance to the largest, regardless of interest rates. This makes it great for those who need quick wins to stay motivated, as clearing small debts early on can build confidence and positive momentum. 

On the other hand, the debt avalanche method targets debts with the highest interest rates first. This strategy is more cost-efficient in the long run, helping you save more on interest — but progress can feel slower, especially if your largest debts also carry the highest rates. If you thrive on visible progress and need motivation to keep going, the snowball method may be the better fit. But if your main goal is to minimise total interest paid, the avalanche method could be more effective.

Other options to consider

If your debts are complex or exceed what’s manageable with either method, consider:

• Debt consolidation plans from banks
  
  Working with a credit counsellor (e.g. Credit Counselling Singapore)

These solutions can offer structured support, longer repayment terms, and potential fee waivers for those struggling with multiple loans.

Want to start small and build momentum toward a debt-free life? The snowball method could be your most empowering first step.

» Deep-dive into what is debt consolidation and how does it work