Picture a $2,000 store card at 27% interest sitting next to a $9,000 car loan at 6%. Every extra dollar you send to the car loan instead of the card costs you 21 cents a year in avoidable interest.
That gap is the avalanche’s entire advantage. Paying the highest rate first retires your most expensive dollars sooner, so less interest piles up every month after. The wider the spread between your highest and lowest rates, the more you save. That mix of double-digit cards and single-digit loans is where the avalanche earns its keep. When your rates sit within a point or two of each other, the difference shrinks to pocket change and the payoff order barely matters.
The catch is staying power. Your highest-rate debt is often a big balance that takes months or years to clear, and without the quick wins the snowball delivers, plenty of people stall out. A finished snowball beats an abandoned avalanche every time.
Running the avalanche takes four moves:
- List every debt with its balance, interest rate, and minimum payment.
- Keep paying the minimum on every debt, on time.
- Send every spare dollar to the highest-rate debt until it’s gone.
- Roll that entire payment into the next-highest rate and repeat.
Your total monthly payment never shrinks. It rolls forward and gains force with each payoff, just aimed at the expensive debt first. If two debts share the same rate, knock out the smaller balance first and bank the quick win for free.
Before you commit, run your real debts through a free debt payoff calculator in both orders. If the avalanche saves you serious money, let that number be your motivation. If the savings are small, pick whichever order you’ll actually finish.
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