Debt avalanche method

The debt avalanche is a way to order debt repayments by interest rate. You pay the minimum on every debt, send any money left over to the debt with the highest APR, and when that debt is cleared, add its payment to the one with the next highest rate. The US Consumer Financial Protection Bureau (CFPB) calls it the highest interest rate method and says it "can save you money in the long run", because it clears your costliest debts first.

Because less of each payment goes on interest, the avalanche usually costs less and finishes sooner than other orders on the same budget. The CFPB notes the drawback: it may not feel like progress, since the first debt you clear can be a large one.

Example: take three debts totalling £10,000: a £1,500 loan at 9.9% APR (minimum £50 a month), £3,000 on Card A at 24.9% (£75) and £5,500 on Card B at 19.9% (£140), with £450 a month to spend. The avalanche clears Card A in month 14 and everything in 28 months, with £2,420.63 of interest. Paying the smallest balance first (the debt snowball) takes 29 months and costs £2,723.77, so the avalanche saves £303.14. Paying only the minimums would take 87 months and cost £7,174.01 (RightSums engine, 27 September 2026). The method works the same in pounds or dollars.

Enter your own debts in the debt payoff planner, test a single card in the credit card payoff calculator, and compare both methods in debt snowball vs avalanche.