When paying off multiple debts, the order in which you attack them changes both how much interest you pay and how long it takes to feel like you're making progress. Two methods dominate the advice: the snowball and the avalanche.
The debt avalanche: mathematically optimal
With the avalanche method, you make minimum payments on every debt, then throw every extra dollar at whichever balance has the highest interest rate, regardless of its size. Once that's paid off, you move to the next-highest rate. This method minimizes total interest paid — it is, mathematically, the cheapest way to become debt-free.
The debt snowball: behaviorally optimal
With the snowball method, you ignore interest rates entirely and instead pay off the smallest balance first, regardless of its rate, while making minimums on everything else. Once the smallest debt is gone, you roll that payment into the next-smallest. It usually costs slightly more in total interest — but it produces a "win" faster, which research on behavior change suggests keeps people motivated to continue.
A quick way to decide between them
- If your debts have similar interest rates, use the snowball — the interest-savings gap is small, and the motivation boost isn't.
- If one debt has a dramatically higher rate (think a high-interest credit card next to a low-interest student loan), the avalanche saves meaningfully more.
- If you've started and abandoned a debt payoff plan before, default to the snowball. Consistency beats optimization.
A hybrid worth considering
Some people use a blended approach: knock out one or two very small balances first for early momentum, then switch to attacking the highest interest rate for the remainder. This isn't textbook, but personal finance isn't a math competition — it's a behavior problem with numbers attached.
What matters more than the method
Whichever approach you pick, automate the "extra payment" portion so it happens without a monthly decision. The method matters less than whether the plan survives contact with a busy month.