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Give Your Credit Some Love With the Avalanche Method

posted on Tuesday, February 14, 2023 in Education

Avalanche Method

Eliminating debt is one of the best ways you can improve your credit score. It is also easier said than done depending on the amount of debt you’ve accumulated. If you are feeling smothered by debt, there are simple strategies that can help you dig your way out, such as the avalanche method.

The avalanche method is an accelerated debt repayment plan. Similar to the snowball method, the avalanche method involves paying extra money toward one debt while making minimum monthly payments on all the rest. Once that debt is paid off, you move on to the next. You repeat this process until all debts have been eliminated.

The snowball method requires you to pay off your smallest debt first. The avalanche method, however, targets your debt with the highest interest rate. Eliminating high-interest debt first allows you to pay less in interest as you eliminate your debts.

Any debt repayment strategy is better than nothing, but both the snowball and avalanche methods can be effective ways to get your finances on track. If you are carrying high-interest debt, such as large credit card balances, the avalanche method may be one to consider!

How to Use the Avalanche Method

The avalanche method can be effective if you stay committed to your repayment plan. A downside to this plan is if your highest interest debt is also your largest debt, it could take a long time before you see results. If you stick with the plan, however, you will save money in the long run. Following are steps to use to employ the avalanche method to your debt repayment strategy.

  1. Make a list of all your personal debts — student loans, auto loans, credit cards, etc. — in order of highest interest rate to lowest.
  2. Adjust your budget so you are making the minimum monthly payment on all bills except for the highest interest debt on the list.
  3. Calculate how much extra you can apply to the highest interest debt to pay it off as quickly as possible.
  4. Once the highest interest debt is paid off, apply the payment you were making on the eliminated debt to the next debt with the highest rate in addition to the minimum monthly payment.
  5. As you pay off each debt, continue to apply the payment to the next highest interest debt until all debts are eliminated.
More Information:

If you are struggling with certain debts and need a high impact strategy to get your finances in order, the avalanche method may be something you should consider. Contact Northwest Wealth Management, LLC at or 877.207.0994 to learn more strategies for eliminating debt.

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These tips are provided by the Iowa Bankers Association.

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