Lesson 9 of 10

How to pay off high-interest debt: avalanche vs. snowball

Credit card interest is often more than 20% a year.

That means a balance grows fast if you only pay the minimum.

First rule: pay the minimum on every debt, every month.

Then put any extra money on one debt at a time. Pick one method:

Avalanche: highest interest rate first. You pay the least interest.

Snowball: smallest balance first. You get quick wins that keep you going.

Example: two credit cards

Card A$500 at 18%

Card B$3,000 at 25%

Avalanche pays firstCard B

Snowball pays firstCard A

Card B has the higher rate. Card A has the smaller balance. When one card is paid off, move its payment to the next card.

Key idea

The best method is the one you'll stick with. Either one beats paying only the minimums.

Try it: our debt payoff estimator shows your debt-free date.