Repayment Strategies

Avalanche

When following the avalanche repayment strategy you make the minimum monthly payment to all of your debts, and send any extra payments to the debt with the highest interest rate. 

This strategy saves you the most money in the long run but it can feel discouraging if your highest interest debt also has a large balance that takes longer to pay off. 

Snowball

When following the snowball repayment strategy you make the minimum monthly payment to all your debts, and send any extra payments to the debt with the lowest balance.

This strategy leads to quick wins which can help keep you motivated. However, it usually results in paying more interest overall compared to the avalanche method. 

Consolidation

Another option is to simplify repayment through consolidation. This means taking out one larger loan to pay off multiple smaller debts.

Consolidation can make repayment easier by reducing everything to a single monthly payment. If you're consolidating high-interest debt like credit cards, it may also lower your interest rate.

But be careful. If you consolidate credit cards, those cards become available to spend again. Some people end up running their balances back up, leaving them with both the consolidated debt and new credit card balances.