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Bottom Line Up Front

  • When it comes to paying down debt, the sooner you take action, the better. Paying any amount of money toward your debt beats not paying at all. 
  • Debt payment methods can include: paying more than the minimum each month, paying more toward your high-interest rate debt first, paying more toward your lowest-balance debt first and moving high-interest rate debt to a lower-interest rate credit card. 

Time to Read

3 minutes

May 1, 2022

According to the New York Federal Reserve’s Household Credit and Debt Report and the Federal Reserve’s Survey of Consumer Finances, the average American carries more than $50,000 of debt. It’s not easy to become debt free, but these 5 debt repayment strategies can get you on the right track to building good credit and meeting your financial goals.

Strategy #1: Pay More Than the Minimum Monthly Payments

This method is simple but effective. Paying more than the minimum payment chips away a larger chunk of the principal portion of your debt, so you save money on interest and speed up your debt payoff. It works for all types of debt, from student loans, medical bills and personal loans to auto loans and credit card debt. 

Strategy #2: Try the Debt Avalanche Method

The idea of the debt avalanche is that you should pay off your highest-interest rate debts first. Your debt payoff gains momentum (like an avalanche!), saving you money. Here's how it works:

  • Find your highest-interest rate debt and commit to making minimum monthly payments, plus the most extra you can afford (while continuing to pay the minimum monthly payment for the other debts).
  • When your highest-interest rate loan is paid off, tackle the next highest-interest rate loan.
  • Continue until all your debts are paid off.

Strategy #3: Pay Back Debt With the Snowball Method

With the debt avalanche, you put extra money toward your highest-interest debt. With the Debt Snowball, you put extra money toward your debt with the lowest balance first. The lowest balance debts are the quickest to tackle, and paying them off can help keep you motivated.

Strategy #4: Transfer Your Balance to a Lower Interest-Rate 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 0% interest rate on balance transfers, more of your credit card payment will be applied toward paying down your balance. This helps you pay off your debt faster. 

Strategy #5: Combine Debts Into a Debt Consolidation Loan 

If you’re juggling several debts, debt consolidation may be the way to go. If you put all your high-interest debt payments into one low-rate consolidation loan, debt management becomes easier. You’re more likely to make your monthly payments on time, which may improve your credit report.

Next Steps Next Steps

  1. Determine the amount of additional funds you can put toward debt each month.
  2. Choose the debt repayment strategy above that works best for you. Are you motivated by quick wins? If so, the snowball method may be best for you. Is your priority minimizing the amount you pay in interest? If so, try the avalanche method.
  3. Not sure which strategy is for you? Talk to a Navy Federal personal finance counselor to help make a plan to reduce debt.


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.