The debt avalanche is a payoff order for someone carrying several debts at once. Pay the minimum on every account, then direct every extra dollar at the balance with the highest APR, regardless of how large or small that balance is.
How it works
- Cover the minimum payment on every debt, every month. This is not optional under any strategy.
- Rank the remaining debts by interest rate, highest first.
- Put all extra money toward the top of that list.
- When that debt clears, roll its freed-up minimum payment into the extra amount and move to the next-highest rate.
Step four is what accelerates the plan. The amount going at the target debt grows each time an account clears, so later debts fall much faster than their balances alone would suggest.
Why it is the cheapest order
Interest accrues in proportion to rate times balance. Reducing the balance carrying the highest rate removes the most future interest per dollar paid. No other ordering pays less in total — this is arithmetic, not opinion.
The tradeoff
The highest-rate debt is often not the smallest, so the first payoff can take a long time. Someone who needs an early visible win to stay with a plan may do better with the snowball order, which usually costs somewhat more in interest but clears an account sooner.
A cheaper plan you abandon is worse than a costlier plan you finish.
See also Debt snowball, Debt Avalanche vs. Snowball, and the free debt payoff calculator.