When credit card usage and debt start to get out of control, it can affect your credit score, ability to secure loans, and make plans for your financial future.
According to the Experian credit bureau, the average American consumer now carries a debt load of $105,056, with total consumer debt climbing to an unprecedented $17.57 trillion.
These debt paydown strategies can help you find the best approach for your financial situation to reduce your debt load.
The most important rule when managing debt is to make sure you pay more than the minimum payment on any credit cards or other interest-bearing accounts to keep the APR from overtaking your original balance. It is best to pay off as much of your monthly statement as you can and fully whenever possible.
Beyond minimum payments, several paydown strategies can help you reduce debt:
Debt Snowball. A common approach, that focuses on paying the smallest balance first. It’s best used when you need quick wins that keep you motivated. Each balance you knock out frees up more money to roll into the next one, helping you build steady momentum.
Debt Avalanche. Similar to the snowball method, the trick with debt avalanche is to shift focus to paying off the debt with the highest interest rate first. This helps when your priority is saving the most money over time rather than chasing fast wins. It’s a slower emotional payoff, but a smarter financial one.
Round-up Payments. This is simply rounding your payments up to the nearest ten or fifty dollars and letting the extra chip away at your balance. It’s an easy, low-effort way to pay a bit more without reworking your whole budget. Small bumps add up quicker than most people expect.
Debt Consolidation Loan. You apply for a personal loan, often called a debt consolidation loan, and once approved, you use that lump sum to pay off your existing debts. From there, you get a fixed interest rate, a fixed monthly payment, and a fixed payoff date. This works when your consolidation rate is lower than your current average rate, you want structure and predictability, or you’re trying to simplify a pile of stressful debts.
Intentional Windfalls. Any bonus, tax refund, or random cash you weren’t counting on goes straight to debt. It’s money you didn’t anticipate, so sending it to your balances gives you a boost towards debt reduction. Over the course of a year, these intentional money moves can make a bigger dent than budgeting alone.
Expense Freeze. You cut extras down to almost nothing for a short period and focus on essentials only. The goal is to redirect as much money as possible toward an all-out debt paydown push. It’s intense, but it can shorten your timeline more than you think.
Focused Side Income. All part-time side and freelance gigs, or money made at extra shifts is directed towards your debt. No splurging with the extra income. The focus stays locked on knocking down balances faster.
WiseOne. Our WiseOne app brings the money management power our community needs into a simple, conversational tool you can use every day. Get instant, personalized guidance and answers to your financial questions. Ask “based on my spending patterns, how can I best redirect my money using the debt snowball approach?” and WiseOne will not only create an actionable plan, but guide you through it.
Take control of your relationship with debt by taking advantage of these strategies.
Whether through one large push from a windfall or a more gradual approach by rounding up payments, stay focused on keeping any new debt out of the equation. Remember to evaluate how any rate and duration changes will affect your total payment over the lifetime of the debt term.
By working with these tools, keeping any new incurred debt to a minimum, and staying disciplined, you can best attack debt from all sides.
