Will the Debt Avalanche Method Work for You?

What is the Debt Avalanche Method?

The debt avalanche method may save you time and money by targeting the debt with the highest interest rate first.

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The debt avalanche method involves paying off debts in order of highest to lowest interest rate: Pay the minimums on all debts, but add whatever extra you can to that with the highest interest rate. It’s a good option for people whose eyelids twitch when they think about how much a high interest rate adds on top. But less so for people whose highest-interest balances will take a long time to pay off. We’ll explore the ins and outs of the debt avalanche method, and compare it with another popular approach — debt snowball.

What is the debt avalanche method?

What is the debt avalanche method? The debt avalanche method targets your debt with the highest interest rate first, then the debt with the next-highest interest rate, and so on. This route may help you save on interest over time. But it can take a while to knock out the first balance if it’s large. If you tend to be analytical and patient, the debt avalanche method may appeal to you.

How does the debt avalanche method work?

How does the debt avalanche method work? To use the debt avalanche, follow these steps: List your debts (not including your mortgage), in order of highest interest rate to lowest. Calculate how much more than the minimum payments you can put toward debt each month. Pay the minimums each month on all debts except the one with the highest interest rate. Put the extra money you’ve determined you can afford toward the debt with the highest interest rate each month until you wipe it out. Next, put all your extra money toward the debt with the second-highest interest rate. Repeat until all debt is paid off. Each time you pay off a balance, add whatever you were paying toward it to the amount you’re throwing at the next debt on your list. Start at the peak, then pick up mass and speed as you go. » Learn about more ways to pay off debt » Learn

Debt avalanche example

Debt avalanche example Let’s say you have the following debts: A medical bill for $1,500 at no interest. A credit card balance of $2,500 at 22.9% interest. A credit card balance of $5,000 at 15.9%. What you pay each month: The minimum on all balances. What you pay each month: Where you put any extra cash first: The $2,500 credit card at 22.9% interest. Where you put any extra cash first: What you’d pay off last: The $1,500 medical bill at 0% interest. What you’d pay off last:

Debt avalanche vs. debt snowball

Debt avalanche vs. debt snowball The debt snowball method is another way to manage multiple debts. By contrast, debt snowball has you target the debt with the smallest balance first, no matter the interest rate. Pay it off, then move to the next smallest loan, ideally in fairly quick fashion. If you need short-term victories to keep you going, debt snowball may be more appealing.

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Benefits and drawbacks of each method, according to Reddit:

We used AI to sift through Reddit forums, analyze feedback and summarize how users feel about debt payoff strategies. People post anonymously, so we cannot confirm their individual experiences or circumstances. We used AI to sift through Reddit forums, analyze feedback and summarize how users feel about debt payoff strategies. People post anonymously, so we cannot confirm their individual experiences or circumstances. Avalanche Avalanche Benefit: Save more money on interest. Benefit: Can lead to faster debt pay off. Drawback: May be harder to stick with, psychologically. Drawback: May not be suited for people with less discipline. Snowball Snowball Benefit: Provides quick wins. Benefit: Builds confidence in your ability to pay off larger debts. Drawback: Pay more interest overall compared to debt avalanche. Drawback: May take longer to eliminate debt.

When is the debt avalanche method a good fit?

When is the debt avalanche method a good fit? The debt avalanche method takes some patience, especially if your highest-interest debt also has the largest balance. But this strategy can really pay off for those determined to get out of debt while reducing overall interest costs. It can also be daunting and difficult to stay the course on your biggest bills. If this method gives you pause, debt snowball is another great option. Explore more on Article sources NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines. About the authors Lauren Schwahn is a writer at NerdWallet who covers credit scoring, debt, budgeting and money-saving strategies. She contributed to the "Millennial Money" column for The Associated Press and managed a team of writers producing content for the series. Her work has also been featured by USA Today, MSN, The Washington Post and more. Lauren has a bachelor’s degree in history from the University of California, Santa Cruz. She is based in San Francisco. Published in Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She holds a bachelor's degree in journalism from Auburn University and a master's in education from Georgia State University. Before coming to NerdWallet, she worked for daily newspapers, MSN Money and Credit.com. Her work has appeared in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and elsewhere. Twitter: @BeverlyOShea. Tommy Tindall is a lead writer and content strategist covering how to make money — and how to keep it. He’s recorded and written about his experience testing popular gig jobs like driving for Uber, delivering with DoorDash and full-service shopping for Instacart. He loves making an extra buck, but laments the hours of awkward silence he endured as an Uber driver (never again). Cool kids might call him a content creator because he makes YouTube videos for the NerdWallet channel and app, but he himself is no longer very cool. Ask him about budgeting apps — he's tried most of them, but still prefers a good ole Google sheet to track spending. Then be sure to smash that “like” and “subscribe” button. Before NerdWallet, Tommy held decidedly more boring jobs at Fannie Mae and Booz Allen Hamilton. Today, he feels super privileged to write for you, the consumer. Published in How to Pay Off Debt: Top Strategies for 2026 Credit Score Ranges: What They Mean and How They Work How to Budget Money in 5 Steps 28 Proven Ways to Save Money How Debt Snowball Works and When to Use It By Lauren Schwahn, Tommy Tindall, Tiffany Curtis 6 Things to Know About Living a Debt-Free Life By Kate Ashford, WMS™, Tiffany Curtis DTI Calculator: How to Find Your Debt-to-Income Ratio By Jackie Veling, Nicole Dow What Is Debt and How Do You Handle It? By Sean Pyles, Lisa Mulka