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The debt avalanche method is a debt payoff strategy where you attack the highest-APR debt first while paying minimums on others. Mathematically optimal for minimizing total interest.
The avalanche method is mathematically optimal for minimizing total interest paid. By eliminating the highest-cost debt first, the borrower stops the largest source of new interest accrual, accelerating overall payoff.
A borrower has three debts: $5,000 credit card at 24% APR, $3,000 personal loan at 12% APR, and $8,000 student loan at 6% APR. Using the avalanche method, they pay minimums on all three plus all extra cash toward the 24% APR credit card until it's paid off. Then they move to the 12% personal loan. Then the 6% student loan.
Compared to the snowball method: The snowball method targets the smallest balance first regardless of APR, prioritizing psychological momentum over math optimality. Both methods work; avalanche saves more interest, snowball provides more emotional reinforcement.