Lowest total interest
How the debt avalanche method works
The debt avalanche method ranks all debts by interest rate, highest first, and directs all extra payments to the top of the list while paying minimums on the rest. Once the highest-rate debt is gone, the freed-up payment cascades to the next. Avalanche minimises total interest paid — typically saving thousands compared to snowball — but requires more discipline because early balances may be large.
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Try calculatorKey takeaways
04 · ideas- Avalanche targets the highest APR debt regardless of balance size
- Total interest paid is lower than snowball when rates differ significantly
- Requires maintaining minimum payments on all other debts
- Both avalanche and snowball are established personal finance frameworks
The debt avalanche is a debt repayment method that directs extra money toward the debt with the highest interest rate, regardless of balance size.
How it works:- List all debts with balances, minimum payments, and interest rates
- Pay the minimum on every debt each month
- Apply all additional funds to the debt with the highest APR
- When that debt is paid off, add its minimum to what you apply to the next-highest APR debt
Example:
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Credit Card A | $3,200 | 24.99% | $64 |
| Credit Card B | $1,500 | 18.99% | $30 |
| Personal Loan | $5,000 | 12.5% | $112 |
With $400/month available, $194 in extra funds (after minimums) goes to Credit Card A first.