Proven Strategies for Successful Debt Repayment

    6/28/2023
    Learn ways to pay down debt and build slack
    Paying off debt is an essential step towards achieving financial freedom and stability. Yet, for many of us it can be challenging to know where to start. Here we discuss different strategies to pay off debt and take control of your financial situation.
     
    Snowball Method
    The snowball method is a debt reduction strategy that focuses on paying off smaller debts first while making the minimum payments on larger debts. Once the smaller debts are paid off, the payments that were going towards the smaller debts are then applied to the larger debts, creating a snowball effect.

    The psychological boost you get is one of the main benefits of the snowball method. As you see your debts decrease, your motivation to keep paying off your remaining financial obligations increases. The progress you’re making will continue to grow even if you only paid off your smallest balance.

    Avalanche Method
    The avalanche method focuses on paying off debts with the highest interest rates first, saving you money in the long run by reducing the amount of interest you pay. You make minimum payments on all debts except the one with the highest interest rate, to which you allocate as much money as possible until it is fully paid off. Once the highest interest debt is paid off, you move on to the next one and repeat the process.

    With the Avalanche Method, it may take longer to see progress, as your highest interest debts may also be your largest debts. However, if you're looking for a strategy that can save you money in interest over time, the Avalanche Method may be a good option for you.

    Debt Consolidation
    Debt consolidation is a strategy that involves taking out a loan to pay off all other debts, consolidating them into one payment. The goal of this method is to lower the overall interest rate and potentially reduce the total amount of interest paid overtime. This can also simplify debt repayment, making it easier to manage. Learn more about our personal loan.
     
    Transfer Debt to Low-Interest Card
    High interest rates make it harder to become debt free because you’re paying your principal balance plus high interest. If you transfer your higher-interest credit card balance to a credit card with a lower balance transfer rate, more of your credit card payment will be applied toward paying down your balance and helps you pay off your debt faster. There is no balance transfer fees or annual fees with the Credit Human Mastercard.


    There are several strategies you can use to pay off debt, depending on your financial situation and goals. Whatever strategy you choose, consistency and perseverance are essential to achieve financial freedom and stability. For personalized guidance in paying off your debt, visit a Financial Health Center.

     

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