Debt Avalanche Method
A debt repayment strategy that pays minimums on everything and puts extra money toward the highest-interest debt first.
Definition
With the avalanche method you rank debts by interest rate. You pay every minimum, send all extra money to the highest-rate debt, and when it is cleared, roll that payment into the next highest. Mathematically it minimises total interest paid, though early progress can feel slow if the highest-rate debt is large.
Examples
• Debts: card A 2,000 at 24%, card B 500 at 18%, loan 5,000 at 8%. Avalanche targets card A first. • After card A is cleared, its payment plus extra goes to card B, then the loan.
Pros
Lowest total interest and usually the shortest overall payoff time for the same monthly amount.
Cons
If the top-rate debt has a large balance, it can take months to see a debt disappear, which some people find demotivating.
Avalanche vs snowball
Snowball targets the smallest balance first for quick wins. The better method is the one you will maintain.
Also Known As
Highest-interest-first · Debt stacking
Key Takeaways
- Pay minimums on all debts.
- Extra money goes to the highest rate.
- Roll payments forward as debts clear.
Frequently Asked Questions
Compared with snowball for the same payments, yes — though the difference may be small if rates are similar.
Yes. Some clear one tiny balance for momentum, then switch to avalanche.
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