Published on July 19, 2025 | Last Updated on September 20, 2025

What Is The Debt Avalanche Method & How To Use It

If you’re feeling overwhelmed by multiple debts and looking for the smartest way to pay them down, the debt avalanche method might be the solution. This strategy focuses on tackling high-interest debt first, helping you save money and get out of debt faster. In this guide, we’ll break down exactly how it works, when to use it, and how it compares to other popular methods, so you can make the most informed choice for your financial future.

What Is The Debt Avalanche Method?

The debt avalanche method is a debt repayment strategy where you focus on paying off your debt with the highest interest rate first, while making minimum payments on your other debts. Once the highest-interest debt is paid off, you move on to the next highest APR account, all the way until all your debts are gone.

The goal? Minimize the total amount of interest you pay, which can speed up your journey to becoming debt-free. Each time you pay off your highest APR account balance, you then free up the extra money that will go to the next largest bill.

How Does The Debt Avalanche Method Work?

There are a few steps to the debt avalanche method that help make this method work. Of course, it will require willpower and discipline, so keep that in mind as well. Let’s use these numbers to help give an example for this breakdown. In this scenario, you have a $12,000 credit card balance with a 24.5% APR, a $1,500 personal loan balance with an 25% APR, and a $5,500 student loan balance with a 9% APR. For this example, let’s also assume that minimum payments are $240 for the credit card, $50 for the personal loan, and $70 for the student loans. Let’s get started working through this scenario!

1) List All Your Debts By Interest Rate, From Highest To Lowest

This is one of the first steps for the process and will help you determine which of your debts to tackle first. Why is this important? Well, the whole idea is to reduce the account to zero to reduce the total interest payments being made.

While the total amount owed on the account will vary, knowing your APR is an important first step. Given the numbers for the example we provided, this would make the personal loan at 25% APR the first bill to pay off. After that bill, the credit card and student loan would follow respectively.

2) Make Minimum Payments On All Debts

While you are working on tackling that first bill with the highest APR, the goal is to continue to make your minimum payments on the rest. This is crucial since the majority of your liquid income should be focused on paying off that largest APR account. 

3) Put Any Extra Money You Can Toward The Debt With The Highest Interest Rate

While the minimum payments are working on maintaining a slower paydown cycle, your extra money is going to be hard at work. Where? This is where those extra payments come into play. Every payment beyond your minimum payment goes directly to the principal for the debt to help lower it.

4) Once That Debt Is Paid Off, Redirect Your Extra Funds To The Next-Highest-Interest Debt

This is where it is easy for some to think that they have done enough. However, this is where discipline comes in to help you continue your progress. Based on the initial numbers for the example, this would make the $12,000 credit card debt at 24.5% APR would be next. Since you are targeting the debt with the highest interest rates, when you see larger numbers, it can be discouraging. However, once that first debt is paid, you can redirect those funds to this new debt to pay it down faster.

5) Repeat Process Until You’re Debt-Free

Depending on how many bills you are looking to pay off, you may notice a longer or shorter payoff timeline. However, the goal is to continue to repeat this until you are debt-free. 

This strategy works well because interest adds up quickly, and targeting high-interest debt first prevents more interest from accumulating.

Why People Love The Debt Avalanche Method

People love the debt avalanche method since it can help to provide larger savings on interest payments if done correctly. While the payoff times may take longer depending on your financial situation, you can help expedite the paydown period and see savings on interest in the longer term.

The Debt Avalanche Pros:

• Saves you money: You’ll pay less in interest over time.
• Faster payoff: You can often eliminate debt more quickly than with other methods.
• Highly logical: It appeals to those who prefer a math-based, cost-effective approach.

The Debt Avalanche Cons:

• Progress can feel slow: You may not get that instant gratification of seeing a small debt disappear quickly.
• Requires discipline: Sticking with it long-term can be challenging without visual wins.

Debt Avalanche Method Vs Debt Snowball Method

When it comes to getting out of debt, there’s no one-size-fits-all strategy. The debt avalanche and debt snowball methods are two of the most popular options, each with a different approach:

• Debt Avalanche: Focuses on paying off debts with the highest interest rate first.
• Debt Snowball: Prioritizes the smallest balances first, regardless of interest rate.

The avalanche method is ideal for maximizing long-term savings, while the snowball method is great for building quick momentum. Both are great, they just function slightly differently. Another alternative is to use a hybrid approach to reduce your debt, but ultimately, it will depend on your individual financial situation.

Should You Use The Debt Avalanche Method?

If your top priority is saving money on interest and paying off debt as efficiently as possible, the debt avalanche method is likely the right choice for you. It rewards consistency and long-term thinking, making it ideal for those who are financially disciplined and comfortable waiting a bit longer to see progress.

That said, the best debt repayment strategy is the one you’ll actually follow. Whether you’re drawn to the cost-effective power of the avalanche or the psychological momentum of the snowball, committing to a plan is what truly moves the needle.

No matter which route you choose, taking that first step toward financial freedom is a win in itself.

Disclaimer:

This content is for informational purposes only and does not constitute financial advice. The information provided is based on personal opinion and general knowledge. You should consult with a licensed financial advisor or professional before making any financial decisions.

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