When repaying multiple loans, the avalanche method pays minimums on everything but throws all extra money at the loan with the highest interest rate first — this minimizes the total interest paid over time.
The snowball method instead targets the loan with the smallest balance first, regardless of its interest rate — it costs more in total interest, but the quick wins of clearing whole loans can keep you motivated to stick with the plan.
Neither is objectively ‘correct’ — avalanche is more efficient on paper, but if you know you need small wins to stay disciplined, snowball’s psychological momentum can be worth the extra cost.
Example.With 24% credit card debt and a 9% personal loan, avalanche says pay off the credit card first — it’s costing you far more per rupee outstanding, even if its balance is larger.