The Debt Avalanche Method in Canada: Save the Most Interest

Make minimum payments on all debts, then direct every spare dollar toward the highest-rate debt. Once eliminated, that payment rolls to the next highest rate. For most Canadians, this means attacking credit cards (19.99%) and retail store cards (25-29%) first, then personal loans, lines of credit, and finally lower-rate debt.

Canadian example: you owe $3,000 on a credit card at 19.99%, $8,000 on a personal line of credit at 7.5%, and $20,000 on a car loan at 5.9%. The avalanche targets the credit card first — even though the car loan is the largest balance — because the 19.99% rate is costing you the most per dollar of debt.

Depending on your balances and rates, the avalanche can save hundreds to thousands of dollars compared to the snowball. The savings are most significant when high-rate balances are large — which is common given how easily Canadian credit card debt accumulates at 19.99%.

The challenge: if your highest-interest debt has a large balance, it may take many months before you eliminate it entirely. This can be psychologically challenging for people motivated by visible progress and quick wins.

Many Canadian financial educators recommend a hybrid: use the snowball to eliminate one or two small debts quickly for momentum, then switch to the avalanche for the remaining balances. This combines the motivation of quick wins with the efficiency of interest optimisation.