Summer is ending, fall’s almost here, and we can smell the snow off in the distance. Ready for chilly winters yet? 🥶 We could do without shoveling the driveway, but we love us some hot chocolate by the fire! 😌☕
If you’ve got credit card debt, the sooner you pay it off, the better. ✅ Here, we’re diving into two common ways people pay off their debt so you can choose one that floats your boat.
Here’s Five Fast Facts on two of the most popular debt payoff methods:
- ⛄ Balls To the Wall - Let’s talk debt snowball first. In this strategy, you’ll first work on paying off the account with the smallest balance. Then, you’ll work through the other accounts from the lowest balance to the highest. You’ll continue to pay minimum payments on all accounts, but you’ll put extra towards that one with the smallest balance. Just like rolling a snowball.
- ⭕ Saved By Zero - One of the best pros of the snowball method is that you’ll get to see accounts with $0 balances sooner. This gives you more motivation to keep going. The downside? You’ll likely pay more in interest charges and pay off all of your debt in a longer period of time than the avalanche method.
- ⛰️ Peak Performance - In the avalanche strategy, you’ll first focus on the account with the highest interest rate. Like in the snowball method, you’ll still pay minimum payments on all accounts, but your extra cash will go towards your target. After that’s paid off, your extra moolah goes towards the account with the next highest interest rate.
- 📈 How Interesting - The best part of the avalanche method is saving on interest charges, which rack up quick. One study showed that people can save up to 4.3% in interest through this method. With the average credit card interest rate now hovering around 21%, that’s good news.
- ⛷️ Long Game - Other pros of the avalanche method? You’ll likely pay off your debt faster than the snowball method. However, getting to that first $0 balance will take you longer. If you need that goose egg to keep you motivated, you might be tempted to throw in the towel before you’re all paid off.
🔥Bottom line: No matter how you melt away your debt mountain, if you’re trying, we give you an A for effort. Whether you’re Team Snowball or Team Avalanche, we hope you get down to zero in a hurry. Wondering what’s going on with tariffs? Get an update on all things China and trade right here!
Which debt payoff method works best for you?
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