How the Debt Avalanche Works
Order debts by interest rate (highest to lowest). Pay minimum on all debts, then put all extra payment toward the debt with the highest APR. Once paid off, roll that payment to the next highest rate. This mathematically minimizes total interest paid.
Formula: Each month, interest accrues on remaining balances (APR ÷ 12). Payment is applied to interest first, then principal. Our calculator simulates this monthly until all debts are zero.
Studies show the avalanche method saves the most money, though it may take longer for the first debt to be eliminated compared to the snowball method.
Frequently Asked Questions
What is the debt avalanche method?
A debt reduction strategy where you prioritize debts with the highest interest rates first, while making minimum payments on others. After each high-rate debt is paid, you apply its payment to the next highest rate, saving the most on interest over time.
Which is better: avalanche or snowball?
Avalanche saves you more money mathematically. Snowball gives quicker psychological wins by eliminating small balances first. The best method is the one you can stick with consistently.
What if my monthly payment changes?
You can recalculate anytime. Adjust the total monthly payment to see how extra payments speed up your debt freedom date and reduce interest.
Does this include interest?
Yes, each debt accrues monthly interest based on its APR. The schedule shows exactly how much interest is paid each month and total interest over the life of the plan.
Can I use this for variable‑rate debts?
For variable rates, use the current APR as an estimate. The calculator assumes rates remain constant; actual results may vary if rates change.