What is a debt avalanche and how does it work?

A debt avalanche is a debt repayment strategy where you focus on paying off your highest interest rate debt first while making minimum payments on all other debts. Once the highest interest debt is eliminated, you roll that payment amount into attacking the next highest rate debt, and so on. For example, if you have a credit card at 22%, a personal loan at 12%, and a car loan at 6%, you'd throw all extra money at the credit card first. This method saves the most money in interest over time compared to other strategies like the debt snowball. It requires discipline since you may not see quick wins if your highest interest debt also has a large balance.