Debt Avalanche Method Explained
The debt avalanche method is a payoff strategy where you make minimum payments on every account and put extra money toward the debt with the highest interest rate first.
How the Debt Avalanche Method Works
Start by listing every debt with its balance, APR, and minimum payment. After covering all minimum payments, apply extra money to the highest APR account. When that account is cleared, roll its payment into the next highest APR balance.
Why It Can Save Interest
Because expensive debt grows faster, targeting high-interest balances first may reduce total interest compared with spreading extra payments across all accounts.
When This Strategy Makes Sense
The avalanche approach can work well for people who are motivated by long-term savings and can stay consistent even if the first balance takes time to disappear.
Simple Example
If one credit card has a 27% APR and another loan has a 9% APR, the avalanche method focuses extra payments on the 27% card first.
Use a Calculator Before You Start
A calculator helps turn balances and rates into a clear estimate. Test your plan on the Debt Avalanche Calculator.
Continue Learning
Return to the Debt Avalanche Calculator to test your numbers, or read another guide below.