Debt Avalanche

The debt snowball method orders your debts from smallest balance to largest, paying minimums on all but attacking the smallest first. Each cleared debt delivers a quick win that builds motivation to keep going. It can cost slightly more interest than the avalanche approach, but the momentum from early successes helps many people stay committed to becoming debt free.

Annual Percentage Rate expresses the yearly cost of borrowing, combining the interest rate with certain fees into a single figure. It lets you compare loans and credit cards fairly, since a low headline rate can hide expensive charges. A higher APR means debt grows faster, so tracking balances and payments helps you prioritise paying down the costliest accounts first.

An interest rate is the percentage charged on borrowed money or paid on savings over a period, usually expressed annually. On debt it sets how fast a balance grows; on savings it determines how quickly your money earns more. Knowing the rates attached to your accounts helps you decide which debts to clear first and where saved money works hardest.