Strategies to Repay Debt

Strategies to Repay Debt

Share this:

Whether it be a young child dealing in “IOUs” or a middle-class worker attempting to pay off their car loan, almost every American has dealt with debt. Debt is normal and an essential part of financial life. However, what separates those who succeed from those who fail strongly depends on how they mitigate their debts. At a glance, repaying debt may seem complicated, but in reality, effective planning and patience can easily crush debt. Part of effective planning includes utilizing debt repayment strategies. The three main strategies are the Avalanche method, the Snowball method, and the Balance Transfer method.

Avalanche Method

The Avalanche method is one of the most effective strategies for repaying debt. This method’s essential feature consists of repaying debt from the highest interest rate to the lowest. This minimizes the amount paid overall and time spent in debt. To implement this method, first list all the debts in order of interest rate. Then begin by making the minimum monthly payment to each debt, saving extra money to pay off the debt with the highest interest rate. Once this debt is paid off, the process is repeated for the debt with the second-highest interest rate, and so forth. The Avalanche method is one of the most commonly recommended strategies, and for good reason. This method is extremely efficient. Like an avalanche, it may be difficult to visualize initial progress, but once it gets going, the effects are poignantly perceived. 

Snowball Method

The Snowball method is another highly-praised strategy for repaying debts. The snowball method involves targeting debts from smallest balance to largest balance. Similar to the avalanche method, one must first list their debts in order of money-owed. Then they must pay the minimum monthly payment for all their debts, dedicating any extra money to the debt with the smallest balance. Once this debt is completely erased, the process is repeated for the second smallest balance, continuing until nothing is owed. Many love this method because it involves a series of visual victories, which bolsters motivation to continue making payments. On the technical side, this repayment strategy can also greatly improve credit scores as it reduces the total number of accounts with outstanding balances.

Balance Transfer Method

The Balance Transfer method specializes in paying credit card debts. This method involves paying an outstanding credit card debt balance using a different card in an attempt to minimize interest fees over time. In order to pay off debt using the Balance Transfer method, one must first identify the interest rates they are paying on credit cards. Following the previous step, they must apply for a balance transfer credit card. After this process is completed, the balance or balances must be transferred and paid off on the new card. This method works best with a balance transfer credit card that offers 0% APR (Annual Percentage Rate; Interest rate for the whole year) or when combined with the Avalanche Method. This method is risky, as it involves taking on new debts to pay existing debts, but can be extremely rewarding with the right decisions. 


While debt may be daunting at first, with efficient planning, anyone can conquer it. Gauging the situation and applying the method which fits most is essential. Whether it be through the Avalanche Method, Snowball Method, or Balance Transfer Method, financial freedom is only a few steps away. 

About the author

+ posts

I write about current events and economics. I am a senior at Walnut High School.