Pay Off Debt Faster: Debt Avalanche vs Snowball — Which Method Saves More?

The Problem with Multiple Debts

According to the Bank of Thailand (BOT), Thai household debt in 2025 stood at over 90% of GDP — high by international standards. Most indebted Thais typically carry multiple types of debt simultaneously: credit cards, home loans, car loans, and personal loans.

Debt Avalanche — Maximum Interest Savings

Method: Pay the minimum on every debt, then put all extra money toward the debt with the highest interest rate first.

Example:

Credit Card A: 30,000 THB balance at 18% interest
Car loan: 200,000 THB balance at 5% interest
Credit Card B: 15,000 THB balance at 16% interest

Payoff order: Credit Card A (18%) → Credit Card B (16%) → Car loan (5%)

Pros: Saves the most total interest
Cons: If the highest-interest debt is large, progress can feel slow before you see the first win

Debt Snowball — Build Motivation with Quick Wins

Method: Pay the minimum on every debt, then put all extra money toward the debt with the smallest balance first.

Payoff order (same example): Credit Card B (15,000 THB) → Credit Card A (30,000 THB) → Car loan (200,000 THB)

Pros: Pay off small debts quickly, building motivation and a sense of accomplishment — ideal for those who need psychological momentum
Cons: Pays more total interest compared to Avalanche

Which Method Should You Choose?

If you are...	Choose
Highly disciplined and want to minimize total interest	Avalanche
Need motivation and want to see quick wins	Snowball
Multiple debts with similar interest rates	Snowball
Have high-interest credit card debt mixed with lower-rate loans	Avalanche

Bonus Tip: Stop Creating New Debt

Whichever method you choose, the most critical rule is to stop taking on new debt while paying off the old. Otherwise you'll run in circles. Consider cancelling some credit cards or reducing your credit limits temporarily until the debt is cleared.

Source: Bank of Thailand (bot.or.th) — Household debt report, Financial Consumer Protection Center (FCC)