How to prioritize debt repayment: 7 strategies that work

February 14th, 2025

Too much debt is the ultimate killjoy. It can destroy a budget, make long-term financial planning stressful and leave you feeling guilty every time you spend.

And for millions of Americans, high-interest debt is a crushing reality. U.S. consumer debt has hit historic levels, and many people are struggling to keep up.

A study from TransUnion found that median minimum monthly debt payments jumped 32% in just three years—between 2020 and 2023—far outpacing inflation (which was 18%) during that time.

(Quick tip: Try to pay more than the minimum payment. Only making minimum payments can keep you in debt much longer and cost you more in interest.)

Whether you’re juggling credit card balances, student loans or other debt, choosing the right repayment strategy can be a game-changer. It can impact how quickly—and efficiently—you pay off your debt.

That’s why we’ve rounded up seven effective strategies to help you prioritize which debt to pay first—and start building a brighter financial future.

Organize your debt

Before you dive into repayment strategies, you’ll want to get a clear picture of everything you owe. Here’s how:

|1| Make a list of all your debts, including:

Credit cards
Auto loans
Medical bills
Student loans
Personal loans
Recreational loans

|2| For each debt, write down the:

Total balance
Interest rate
Minimum payment

Once you have all the details in one place, you’re ready to review your repayment options and choose a strategy.

7 strategies to pay down debt

Not every method works for everyone. Your personality, lifestyle and unique financial situation will play a big role in determining how to prioritize which debt to pay first.

But we’ve rounded up some popular strategies, along with their pros and cons, to help you decide.

Don’t want to do this alone? A free Dupaco Money Makeover could help you review your entire budget, look for ways to spend less and free up more money for debt repayment.

Request my free Money Makeover >

|1| Maximize your payments

Paying off debt is much easier when you’re not adding to it. By avoiding new debt and maximizing your monthly payments, you can keep your momentum going.

Here are some ways you might be able to do this:

Cut back on non-essential spending (like dining out or subscriptions) and redirect that money toward your debt.
Take on a side gig and put the extra income toward your balances.
Turn your hobbies into extra income. Love animals? Pet-sitting or dog-walking could bring in extra cash!

Pros: You might be able to speed up your debt repayment. And once you’re debt-free, you can start putting those extra dollars toward savings and investments.

Cons: Be mindful of burnout. Finding a balance between any side hustle, job and personal life is key.

An emergency savings fund can act as your safety net—helping you stay on track and handle unexpected expenses without derailing your progress.

See how to build your emergency savings >

|2| Snowball method

Popularized by financial expert Dave Ramsey, the snowball method has you focus on paying off your smallest balance first—regardless of its interest rate.

The goal is to knock out the little balances to feel like you’re making progress. Once you repay that debt, you use the freed-up money to tackle the next smallest debt, and so on.

Pros: It’s motivational! Getting those small wins under your belt can give you a sense of accomplishment and keep you moving forward.

A study from Harvard Business Review backs this up. It found that people are more likely to stick with paying down debt if they see quick wins. Like Ramsey says, “Personal finance is 20% head knowledge and 80% behavior.”

Cons: The downside is that the snowball method ignores interest rates. Why does that matter? You could end up paying more in interest over time, especially if high-interest debts (like credit card balances) remain unpaid for longer.

|3| Avalanche method

The avalanche method prioritizes paying off the debt with the highest interest rate first. Once that’s gone, you move on to the next highest.

This enables you to shed heavy interest rates more quickly and put more of your money toward the principal of your loans.

Pros: You’ll pay less in interest over time, making this method more cost-effective than the snowball method in the long run. This is also a great choice if you’re highly motivated to save money.

Cons: It can take longer to see progress. The prioritization of debt with the highest interest rate may not always be the debt with the smallest balance.

It requires patience and persistence, especially if your highest-interest debt isn’t the smallest.

|4| Debt consolidation

Another option is debt consolidation, which involves combining multiple debts into one single loan or line of credit—ideally with a lower interest rate.

It could take the form of a debt consolidation loan, home equity loan or line of credit, or even a balance transfer (more on that one next!).

Try our free debt consolidation calculator >

Pros: It can simplify repayment by reducing multiple payments to just one. It may also lower your interest rate (saving you money) and even your monthly payment. And you may have the opportunity for a fixed payment timeline. This can make it easier to budget and make long-term financial goals.

Cons: You may not always save money by going this route. Make sure you know what you’re paying now and what you’ll be paying after a consolidation. If not done carefully, you could end up with additional fees or even a higher interest rate in the long run.

Explore debt consolidation loans >

|5| Balance transfer

A balance transfer involves moving your high-interest credit card balance (or balances) to a new card with a low-interest introductory rate.

This can give you an opportunity to focus on paying down the principal without the added burden of high-interest charges.

Make a move that's in your best interest!

Request a Balance Transfer Don't have a Dupaco Platinum Visa? Apply here.

*For existing cardholders, the 2.90% annual percentage rate (APR) balance transfer promotional rate is valid for balance transfers that post to your Dupaco Platinum Visa between January 1, 2025 and March 31, 2025. The 2.90% promotional annual percentage rate (APR) expires six months from the date of your first balance transfer, at which time the APR will revert back to the current standard APR, which effective 1/1/2025 is a variable rate from 13.25% APR to 20.25% APR, based on your creditworthiness.

Must be an existing cardholder and the Visa credit card account must be in good standing to qualify. “In good standing” means the Visa credit card account is not over-the-limit or delinquent. All Visa APRs will vary with the market based on the Prime Rate.

There is a grace period on purchases, and no annual fees or participation fees. Other fees include: cash advance fee-$10.00 or 3.00% of the amount of each cash advance, whichever is greater; foreign transaction fee-1.00% of each transaction in US dollars; late payment fee is $15.00 or the minimum due, whichever is less if you are four (4) or more days late; returned payment fee-up to $25. Offer valid only on Dupaco Platinum Visa. This offer is available January 1-March 31, 2025.

For new cardholders, the 2.90% annual percentage rate (APR) balance transfer introductory rate is valid for new cardholders’ balance transfers that post to your Dupaco Platinum Visa during the first 90 days following the opening of Dupaco Platinum Visa. The 2.90% introductory annual percentage rate (APR) expires six months from the date of your first balance transfer, at which time the APR will revert back to the current standard APR, which effective 1/1/2025 is a variable rate from 13.25% APR to 20.25% APR based on your creditworthiness. All Visa APRs will vary with the market based on the Prime Rate. There is a grace period on purchases, and no annual fees or participation fees. Other fees include: cash advance fee-$10.00 or 3.00% of the amount of each cash advance, whichever is greater; foreign transaction fee-1.00% of each transaction in US dollars; late payment fee is $15.00 or the minimum due, whichever is less if you are four (4) or more days late; returned payment fee-up to $25. Offer valid only on Dupaco Platinum Visa.

Pros: If you find the right card with a long introductory period, this strategy could reduce the total amount of interest you pay.

Cons: Watch for balance transfer fees and try to pay off the balance before the intro period ends. Otherwise, you could face high interest rates or even additional fees later.

Remember that consolidating debt on its own won’t help someone who overspends or has a hard time managing money.

See how a balance transfer works >

|6| Make micropayments

Micropayments can help you build momentum and continuously chip away at debt. Instead of making one monthly payment, you make several smaller payments during your billing cycle.

To make it easy on yourself, you can set up automatic transfers from your checking account every two weeks so that you end up paying 26 times a year instead of 12.

Pros: Increasing the number of payments can help you pay less in interest and chip away at your debt even faster.

Cons: It requires discipline and budgeting to ensure you can make those extra payments consistently.

|7| Negotiate with creditors

If you’re struggling to keep up with your payments, don’t be afraid to reach out to your creditors. They may be willing to work with you. Ask whether you qualify for a:

Reduced interest rate
Different payment plan
Other financial relief

Pros: You may be able to lower your monthly payments to them more manageable. It could help ease some financial stress without taking on additional debt.

Cons: Negotiating can take time. And not all creditors will negotiate. But it can be worth trying!

Which debt repayment strategy is right for you?

Before committing to a plan, you may want to crunch the numbers with a debt calculator to see how much interest you’d pay and how long repayment would take with each approach.