The debt avalanche is the mathematically optimal way to pay off multiple debts. By targeting the highest interest rate first, you starve your most expensive debt of the time it needs to compound, minimizing the total interest you pay. If your priority is saving the most money, the avalanche wins — and this calculator shows how much.
How the avalanche method works
Order your debts from the highest interest rate to the lowest, regardless of balance. Pay the minimum on all of them, then direct every extra dollar to the highest-rate debt. Once it is paid off, roll its payment into the next-highest rate. Because you always attack the costliest debt first, less of your money is lost to interest overall.
Why rate order beats balance order
A high interest rate does more damage than a large balance. A $2,000 balance at 25% generates more monthly interest than a $5,000 balance at 6%. Clearing the 25% debt first stops the fastest-growing charge, which is why the avalanche minimizes lifetime interest.
A worked example
Imagine a credit card at 24% ($4,000), a personal loan at 12% ($6,000), and a student loan at 5% ($10,000). The avalanche attacks the 24% card first. Compared with paying the smallest balance first, this ordering can save hundreds to over a thousand dollars in interest depending on how much extra you can pay each month.
Getting the most from the avalanche
- Confirm your actual APRs — promotional rates can expire and change the correct order.
- Stay disciplined; the early wins are slower than the snowball, so track your interest savings for motivation.
- Automate minimums everywhere to protect your credit while you focus extra cash on the top-rate debt.
- Revisit the order if you open new accounts or a rate changes.