FOCUS ON THE COST OF BORROWING
Target the highest rate.
Make extra payments count.
The debt avalanche method directs extra money toward your highest-rate debt. Compare the approach with your other options and see a projected path toward payoff.
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How the debt avalanche works
Order your debts by interest rate, highest to lowest. Cover each required minimum, then apply extra funding to the highest-rate debt. When it is paid off, direct that payment capacity toward the next highest rate.
Understand the tradeoff
With the same payment budget and otherwise equal terms, paying higher-rate balances first generally lowers interest costs. If your highest-rate debt is large, the first payoff milestone may take longer than with snowball. Compare both approaches against a plan you can maintain.
Compare your projected payoff
Add current debt details and funding to DebtLiftoff, then compare strategy forecasts. Record payments and refresh balances from statements. Projections depend on your inputs; rates, fees, new purchases, and payment timing can change the actual result.
ILLUSTRATIVE EXAMPLE
Put the method in context.
Using balances of $500 at 12%, $2,000 at 24%, and $5,000 at 8%, avalanche targets the $2,000 debt at 24% first. After all minimum payments are covered, available extra funding goes there. Next comes the 12% debt, followed by the 8% debt. This shows the order, not a guaranteed savings amount.
Questions before you start.
Is avalanche the same as paying the largest balance?
No. It prioritizes the highest interest rate, which may belong to a smaller or larger balance.
Should I ignore deferred-interest deadlines?
No. A promotional deadline can have consequences that are not reflected in the current displayed rate. Review those terms alongside either payoff method.
Learn more: CFPB: Two approaches to reducing debt. Educational information; forecasts are estimates, not guarantees.
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