Plan your debt payoff with the avalanche method: pay minimums on everything and put every extra dollar on the debt with the highest interest rate. See your payoff order, debt-free date and total interest.
How the debt avalanche works
- List your debts from the highest interest rate to the lowest.
- Pay the minimum on every debt.
- Put every extra dollar toward the debt with the highest rate.
- When it is paid off, add its payment to the debt with the next highest rate.
Because the most expensive debt is attacked first, less interest builds up overall. Mathematically, the avalanche is the cheapest way to pay off multiple debts with a fixed budget.
Worked example
The same four debts as in our snowball example, with $800 a month to spend:
| Debt | Balance | APR | Paid off (avalanche) |
|---|---|---|---|
| Visa | $5,500 | 24.99% | Month 17 |
| Store card | $3,000 | 17.99% | Month 21 |
| Medical bill | $1,200 | 0% | Month 24 |
| Car loan | $8,000 | 6.9% | Month 26 |
Everything is paid off in 26 months with about $2,533 in interest, roughly $490 less than the debt snowball. The 0% medical bill is never the target: its $50 minimum alone clears it by month 24.
Avalanche pros and cons
- Pro: lowest total interest and often a faster finish.
- Con: if your highest-rate debt is also large, the first win can take a long time, which some people find discouraging.
A popular compromise: knock out any tiny balance first for a quick win, then switch to the avalanche.
Frequently asked questions
What if a card has a 0% promotional rate?
Enter 0% for now, but note when the promotion ends. If the rate will jump, plan to clear that balance before the deadline.
Should I consolidate instead?
A consolidation loan or balance transfer can lower your rates. Compare the new rate and fees using the loan calculator.
Related tools
Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.