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# Debt avalanche calculator

## Save by paying off your highest-interest debts first.

The debt avalanche method is a popular way to pay off large amounts of debt. By tackling your highest-interest debts first, you can reduce the total amount of interest you pay â€” saving you big in the long run.

### How is the debt avalanche method calculated?

The debt avalanche method is calculated by ordering your debts from highest interest rate to lowest. After making the minimum payment on all of your debts each month, you then put any leftover money toward your highest-interest debt first. Once thatâ€™s paid off, you put that minimum payment and any extra money toward your next highest-interest debt, and so forth, until all of your debts have been repaid.

Follow these steps to calculate the order you should repay your debts using the debt avalanche method:

1. Create a budget to determine your cash flow. Figure out how much money you have coming in each month and how much you need for your monthly bills â€” including the minimum payments to your creditors. If you can cut back on things like a cable subscription or daily coffee, youâ€™ll increase your cash flow and have more money left over to put toward your debts.
2. List out all of your debts and the minimum monthly payments. For every debt, list your balance, interest rate and minimum payment. This gives you an overview of how much you owe and help you determine which debt to tackle first.
3. Order your debts from highest interest rate to lowest. The higher the interest rate, the more that debt will cost you in the long run.
4. Prioritize the most expensive debt. Once you have your debts in order, put any extra cash each month toward the credit card or loan with the highest interest rate. Even \$50 over the minimum monthly payment will help pay it off sooner, so thereâ€™s no amount too small.
5. Increase extra payments as debts are eliminated. After youâ€™ve paid off your first loan or credit card, keep the avalanche going by applying your excess monthly cash and your paid-off debtâ€™s monthly payment toward your second most-expensive debt â€” and so on.

The total time it takes to completely pay off your debts will depend on how much you owe, your cash flow and your ability to stick to a budget.

How to calculate your debt avalanche

### The debt avalanche method in action

Letâ€™s take a look at an example: Catherine is a single woman in her early 30s and has finished paying off her federal student loans for her undergraduate degree.

The amount she can spend on her debts each month is \$500. She has two credit cards, a car loan and a personal loan. Sheâ€™s decided to use the debt avalanche method to save on interest in the long run and open up room in her budget for a mortgage payment down the road.

DebtBalanceMinimum paymentAPR
Credit Card A\$1,500\$4518.99%
Credit Card B\$4,000\$8015.45%
Personal Loan\$3,000\$7013.1%
Car Loan\$5,000\$1206.99%

As you can see, her car loan takes up the majority of her monthly budget, but itâ€™s the two credit cards that are actually the most costly when you order things based on APR.

Since Catherine has \$500 to put toward paying off her debts each month, sheâ€™d make the minimum monthly payment for each bill â€” totaling \$315 â€” then put the remaining \$185 toward Credit Card A until itâ€™s fully paid off.

After, Catherine would tackle Credit Card B by combining that \$185 with the \$45 monthly payment for Credit Card A she no longer has, then repeat the process until all of her debts are paid off.

### Bottom line

Although it takes a lot of discipline, itâ€™s possible to become debt free and save on interest in the process by using the debt avalanche method. Learn more by reading our debt avalanche method guide.

Or compare it to the debt snowball method to find the best strategy for you.

### Compare solutions to pay off your debt

1 - 8 of 8
Name Product Filter Values APR Min. Credit Score Loan Amount
3.99% to 35.99%
Fair to excellent credit
\$600 to \$100,000
Get personalized rates in minutes and then choose an offer from a selection of top online lenders.
5.99% to 35.99%
600
\$2,000 to \$50,000
A prime online lending platform with multiple repayment methods.
5.4% to 35.99%
None
\$1,000 to \$50,000
This service looks beyond your credit score to get you a competitive-rate personal loan.
5.94% to 35.97%
600
\$1,000 to \$50,000
Affordable loans with two simple repayment terms and no prepayment penalties.
7.99% to 35.99%
585
\$2,000 to \$36,500
Get a personal loan with reasonable rates even if you have a fair credit score in the 600s.
6.99 to 22.23%
680
\$5,000 to \$100,000
A highly-rated lender with competitive rates, high loan amounts and no fees.
6.34% to 35.89%
600
\$1,000 to \$40,000
A peer-to-peer lender offering fair rates based on your credit score.
1.99% to 35.99%
None
\$500 to \$100,000
Quickly compare multiple online lenders with competitive rates depending on your credit.

### Compare up to 4 providers

1 - 8 of 8
%
Name Product Amount saved Balance transfer APR Balance transfer fee Minimum Credit Score Filter values
0% intro for the first 15 months (then 15.74% to 24.49% variable)
For each transfer: 3% intro fee (\$5 min) in first 60 days, after that 5% (\$5 min)
670
Get up to 5% cashback in rotating and newly added everyday categories. The refreshed Freedom Flex card has lots of earning potential.
17.99%
3%
670
2% cash back for all PenFed Honors Advantage members and 1.5% cash back on all purchases made with your card.
0% intro for the first 15 months (then 15.74% to 24.49% variable)
For each transfer: 3% intro fee (\$5 min) in first 60 days, after that 5% (\$5 min)
670
This solid 1.5% cashback card gets even better with the addition of up to 5% back in categories like travel, drug stores and dining.
17.99%
3%
670
Earn 5x points on gas at the pump and 3x points on groceries. Earn 1x points on all other purchases.
0% intro for the first 15 billing cycles (then 16.49% variable)
\$5 or 3% of the transaction, whichever is greater
670
Receive an annual \$100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
17.99%
3%
670
Low APR on all purchases including cash advances.
0% intro for the first 15 billing cycles (then 16.49% variable)
\$5 or 3% of the transaction, whichever is greater
670
0% intro for the first 15 billing cycles (then 16.49% variable)
\$5 or 3% of the transaction, whichever is greater
670
Earn 2% point value when redeemed for airfare or cash back through the Luxury rewards program.

### Compare up to 4 providers

How do I know which debt to pay off first?

The first debt you pay off should be the one with the highest interest rate.

For example, a short-term loan with a high APR and numerous fees would likely be the first to go, followed by expensive credit cards and personal loans. Rent-to-own contracts and pricey car loans would also be on the list.

Make your decision based on how much the debt is costing you every month. The more youâ€™re spending on interest and fees, the sooner you should pay it off.

What if my debt is already in collections?

If your debt is in collections, call to see if you can negotiate a lower payoff amount. In some cases, if you can offer a percentage of the debt, a collection agency might take it and write off the rest.

However, it all depends on how much you owe, how much you can pay and the collection agency itself. If it wonâ€™t accept negotiations, you might want to contact a professional for help. Otherwise, add it to your list of debts to pay off using the debt avalanche method.

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