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Escape the Debt Trap
What Is the Debt Avalanche Method?
The debt avalanche method pays off debts in order of highest interest rate first, which minimizes the total interest you pay.
Under the avalanche method, you make minimum payments on every debt except one: the one with the highest interest rate. Every extra dollar goes there until it is paid off, then rolls to the next-highest rate.
The avalanche method is mathematically optimal. It will always save you the same amount or more in total interest compared to any other payoff order.
The tradeoff is psychological. If your highest-rate debt also has the largest balance, it can take a long time before you experience the satisfaction of eliminating an account completely.