a. Snowball methodThe snowball method
is a popular debt repayment strategy that involves focusing on paying off the smallest debt first while making minimum payments on all other debts. Once the smallest debt is paid off, the individual moves on to the next smallest balance. This process is repeated until all debts are paid in full.
The snowball method
can be an effective way to pay off credit card debt faster, as it provides a sense of accomplishment and motivation with each balance that is cleared. Additionally, as smaller debts are paid off, more money becomes available to allocate towards the remaining balances, accelerating the process.b. Avalanche method
The avalanche method is another debt repayment strategy that involves focusing on paying off the debt with the highest interest rate first, while making minimum payments on all other debts. Once the highest interest rate debt is paid off, the individual moves on to the next highest rate balance. This process is repeated until all debts are paid in full.
The avalanche method can save individuals a significant amount of money in interest charges over time, as it targets the most costly debts first. While this method may not provide the same immediate sense of accomplishment as the snowball method, it can ultimately lead to faster debt repayment and greater long-term savings.c. Balance transfer
A balance transfer involves transferring high-interest credit card debt to a new card with a lower interest rate, often through a promotional 0% APR offer for a limited period. This strategy can help individuals save on interest charges and pay off their credit card debt faster, as more of their monthly payment goes towards the principal balance rather than interest.
It's important to note that balance transfer offers often come with fees, and individuals must be diligent in paying off the transferred balance before the promotional period ends. Otherwise, they may face even higher interest rates on the remaining balance, negating the benefits of the balance transfer.d. Low interest credit lines
Use tools like Gauss to lower the APR on your credit card debt without the typical 3-5% transfer fee that balance transfer cards require. In addition to the up front savings, you'll also have access to your low interest credit line for as long as you need it rather than the 12-15 month promotional period that a balance transfer card offers.