Debt avalanche

Debt avalanche is a payoff order. Every debt receives its contractual minimum. Any extra money goes to the open debt with the highest APR. When that balance reaches zero, its minimum joins the extra payment aimed at the next-highest APR. Ties on this site break toward the larger balance, then the name.

The order minimizes interest when the extra payment is real and the APRs differ, because a dollar of principal retired at a higher rate avoids more future interest than a dollar retired at a lower rate. If there is no extra payment, avalanche and snowball barely diverge: each debt is mostly just paying its own minimum. If two APRs are equal, the rate rule has nothing to sort.

Avalanche does not change a credit report, freeze a contractual rate, or produce a credit score. A teaser rate that is about to step up is the wrong sort key if you use today’s promotional APR instead of the rate that will actually accrue. The comparison that matters is total interest and the month the book reaches zero, computed on the rates the contracts will charge.