ClearCalc

What Is the Debt Avalanche Method?

The debt avalanche method focuses on paying off the debts with the highest interest rates first. This strategy minimizes the total interest you pay over time, helping you become debt-free faster compared to other methods.

Here's how it works: Make minimum payments on all debts, but direct any extra money toward the one with the highest interest rate. Once that’s paid off, roll your payment amount into the next highest-interest debt, and continue until all are paid.

Example:

• Debt 1: $1,000 @ 24% APR – minimum $30/month
• Debt 2: $2,500 @ 18% APR – minimum $60/month
• Debt 3: $3,000 @ 12% APR – minimum $75/month

With the avalanche method, you'd target Debt 1 first because of its high APR, even though it’s not the largest balance. This approach saves the most on interest long-term.

Tip:

In our calculator, “Min Payment ($)” represents the amount you’re able to pay each month for that debt. If you can pay more than the minimum, update it here to get an accurate payoff forecast.