What are the debt avalanche and debt snowball methods?

The debt avalanche and the debt snowball methods are two strategies for paying down debt. With the debt avalanche method, you pay off the high-interest debt first. With the debt snowball method, you pay off the smallest debt first. Each method requires you to list your debts and make minimum payments on all but one.

What is the debt avalanche method?

The debt avalanche method can result in paying less interest over time. The debt avalanche method involves making minimum payments on all your outstanding accounts and using any extra money to pay off the bill with the highest interest rate. Using the debt avalanche method will save you the most in interest payments.

What is the difference between Avalanche and Snowball?

In this scenario, the avalanche method would have you pay off your credit card debt first because it has the highest interest rate. If you put your extra money toward that debt, you could pay off your remaining debt in 11 months, paying a total of $1,011.60 in interest. In comparison, the snowball method would have you tackle the car loan first.