Definition

With the debt avalanche, you make minimum payments on everything and throw every extra dollar at the debt with the highest interest rate, then move to the next highest. It minimizes total interest paid and is mathematically the cheapest method. It requires patience when the highest-rate balance is also large.

1. Debt Snowball

   A payoff strategy that targets the smallest balance first for quick wins.
2. Annual Percentage Rate (APR)

   The yearly cost of borrowing, including interest and certain fees.
3. Revolving Credit

   A credit line you can borrow against repeatedly up to a limit, like a credit card.