Interest cost sets the order
The avalanche method aims extra money at the debt with the highest interest rate. Every debt still gets its minimum. Whatever is left over goes to the most expensive balance until it is gone, and then the next most expensive takes its place.
The logic is simple arithmetic. A dollar that pays down a 27% balance stops a 27% charge on that dollar. The same dollar on a 9% balance stops a 9% charge. Each month, $1,000 at 27% APR adds about $22.50 of interest, while $1,000 at 9% adds about $7.50.
As with any rolling plan, a cleared debt's minimum moves forward and joins the extra, so the payment on the next target is larger than the last.
The 0% promo problem
"Highest APR first" sounds clear until a balance sits at 0% for a while. Ranked by today's rate, a 0% card lands at the bottom of the list. But if that promo ends in four months and the rate jumps to 27%, it may soon be the most expensive debt in the group.
A plain rate sort misses that. The avalanche in this calculator re-checks every rate each month. While a balance sits at 0%, it gets only its minimum, because extra money on it stops no interest yet. The month its promo ends, it is ranked by its new rate and can move straight to the front of the line. Until the end month, the calculator charges 0% on that balance. After it, the post-promo rate applies.
For a deeper look at a single promo balance, the balance transfer calculator shows what remains when a promo period ends.
What the math tends to show
Among the simple ordering methods, the avalanche usually produces the lowest total interest or comes very close. That follows directly from sending money where the rate is highest.
It is not always the single lowest-cost order, though. When a debt with a large minimum is cleared early, that minimum rolls forward sooner, and occasionally that timing beats a strict rate ranking. The which debt to pay off first page compares several orders, including the lowest-interest order the math can find.
The other trade-off is timing. If the highest-rate debt is also a large one, the first payoff can take a while, and the list of open accounts stays the same length for longer.
When avalanche and snowball agree
If the smallest balance also carries the highest rate, both methods start in the same place. When the ordering by balance and the ordering by rate match all the way down, the results are identical. The debt snowball calculator runs the smallest-balance order for comparison.
Reading the avalanche results
The results show the order debts are cleared, each one's payoff month, the debt-free month, total interest and total paid. A promo balance only starts receiving the extra once its 0% period ends and its new rate is the highest in the group.
Total interest is the figure this method is designed around. Changing the monthly extra and watching that number move shows how much of the interest cost comes from the timeline itself.