The Debt Avalanche Method

The debt avalanche method is a debt payoff strategy where you pay off your debts in order of interest rate, from highest to lowest, regardless of the balance.

You make the minimum payment on everything, then put every extra dollar toward whichever debt carries the highest rate. When that one is gone, you move to the next highest, and so on. It is the math-optimal way out of debt. Done consistently, it leaves you paying the least total interest of any payoff order.

How the debt avalanche method works

Four steps, repeated until you are debt free:

1. 1List every debt from the highest interest rate to the lowest. Ignore the balances for now.
2. 2Make the minimum payment on all of your debts every month.
3. 3Put every extra dollar toward the debt with the highest interest rate.
4. 4When that debt is paid off, roll its entire payment onto the debt with the next highest rate.

Because you always attack your most expensive debt first, you stop the fastest-growing interest as early as possible, which is what minimizes the total you hand over to lenders.

A simple example

Say you have three debts: a credit card at a high rate with a $4,000 balance, a personal loan at a moderate rate with a $7,000 balance, and a car loan at a low rate with a $9,000 balance. With the avalanche, you attack the high-rate credit card first, even though it is not the smallest balance, because it is the one costing you the most. Once it is paid off, the money rolls onto the personal loan, then the car loan.

The order follows the rates, not the balances. To see how much interest the avalanche would save with your actual numbers, run them through our debt payoff calculator.

How much can the avalanche save you?

The avalanche always costs the least in total interest of any payoff order, because it eliminates your highest-rate balances first. How much you save compared to the snowball depends on your specific mix of debts. If your highest-rate debt is also one of your larger balances, the savings can be meaningful. If your debts have similar rates, the difference can be small.

The size of the advantage varies a lot from person to person, which is why it is worth running both methods through a calculator before you commit.

The trade-off

The avalanche's weakness is motivation. If your highest-rate debt also has a large balance, it can take a while to pay off your first debt, so you may not see a balance disappear for some time. For some people that lack of early wins makes the plan harder to stick with.

If you are disciplined and motivated by knowing you are making the smartest move, the avalanche is for you. If you need to see progress to stay on track, the debt snowball method gives quicker wins at the cost of a little extra interest.

Who the debt avalanche is best for

The avalanche tends to fit if you:

• Are motivated by the numbers and want to pay the least interest possible
• Can stay consistent even without frequent visible wins
• Have one or more high-interest debts draining your budget
• Have a clear, steady extra amount to put toward debt each month

How to start your own avalanche

1. 1List every debt with its interest rate, highest to lowest.
2. 2Choose a fixed extra amount you can afford each month on top of your minimums.
3. 3Send that extra to your highest-rate debt until it is gone, then roll it to the next.
4. 4Keep your total monthly payment steady as balances fall, and recheck your plan each month.

As with any payoff plan, the key is to commit to a fixed monthly amount and keep paying it even as your minimums shrink. That consistent extra payment does the heavy lifting. When you are ready, our debt payoff calculator shows the full timeline and interest savings, and our snowball vs avalanche guide compares the two side by side.

Frequently asked questions