October 8

2 Tactics That Really Work to Pay Down Debts (And How Credit Innovation Group Can Help)

Credit Repair


The average American has more than $90,000 in debt. From mortgages to car loans to credit cards, this debt can lower your credit score and stand in the way of your future financial goals.

Unfortunately, tackling debt of any size can often feel like an uphill battle. Minimum monthly payments on several accounts can take up a large portion of your available income each month. This makes it tough to get ahead. Interest rates are piling on at the same time. As a result, even a small debt can take months or even years to pay off.

If you want to make a dent in your debt, lower your credit utilization rate, and start improving your credit score, you first need to find the right tactic for tackling your debt.

Keep reading to learn two tactics that really work to pay down debts, and how Credit Innovation Group can help to jumpstart your debt repayment.

Avalanche Method

One tactic for paying off debt is called the Avalanche Method. With this method, borrowers make the minimum payment on all of their credit accounts. This includes credit cards, loans, and your mortgage. 

Then, any additional money that’s leftover and available each month is used to make extra payments to your credit account with the highest interest rate. Your credit accounts with the highest interest rate accumulate the highest amount of interest over time. So paying these off first means less money spent in the long run.

Credit cards are notorious for their high-interest rates. The highest interest rate on record was a 79.9% rate on a First Premier Bank card offered to borrowers in 2010. That card is no longer available. Today, the highest interest rate is on a First PREMIER Bank Credit Card, and is set at 36%. The average interest rate on credit cards in the U.S. is 17.87%.

When you’ve paid off the credit account with the highest interest rate, you’ll move on to the next higher. And now that you’re making one less payment each month, you’ll have more money in your pocket to put towards that next debt. This is where the name of this tactic comes from; after paying down your highest interest rate account, you’ll pay off the rest more quickly as you have more cash available. 

The downside to this tactic is that it takes longer to get started. If you’re using a large portion of your available credit on your highest interest account, it may take months or even years to pay it off. 

Snowball Method

The next tactic to paying down debt is called the Snowball Method. Rather than looking at the interest rates on your credit accounts, this method has you looking at the balances on each account.

You’ll start by paying off the credit account with the smallest balance. Once you’ve made the minimum payments on all of your other accounts, put any extra cash you have available towards that account.

This method is called the Snowball Method because you’ll tackle debts more quickly than you do with the Avalanche Method. The latter is slow to start. But this one feels as though it’s working much faster, as your credit accounts begin reading $0.

You’ll still have more cash available to put towards your debts as you pay off each account. However, it will be less than you’d have by paying off your highest interest or highest balance account.

Avalanche Method VS. Snowball Method

Both the Avalanche Method and the Snowball Method can be effective tactics for helping you finally pay down your debts. However, depending on your own habits and prior experience with attempting to tackle your debts, one method may be a better choice than another.

In the long run, paying down your credit account with the highest interest rate first will save you more money over time. But if you’ve struggled to stay committed to a plan to pay down debt in the past, this method can be tough to stick to. Progress starts slow, and it will be a long time before you see big changes being made in your debt.

Would this be likely to discourage you and cause you to lose focus on your goals? If so, the Snowball Method might be a better choice. With this method, you’ll see results faster. This might be just the key to helping you to stay focused and motivated on your end goal.

How Can Credit Innovation Group Help You Pay Down Your Debts

Whether you’ve decided that the Snowball Method or Avalanche Method is the better choice for you, Credit Innovation Group can help you jumpstart your debt repayment.

With our Cashflow Accelerator, we’ll help you identify extra money each month that you can use to start paying down your highest interest or smallest balance account. We’ll start by helping you organize your personal budget. You’ll see exactly where your monthly spending is going. And you’ll be able to identify areas where you can reduce your spending. This means more money each month to pay down your debts.

Discovering extra cash for one-off payments will help to accelerate your debt payoff plan, helping you reach your goals faster.

Next, Credit Innovation Group will help you develop a debt payoff plan that works, based on your unique debt profile. Whether it’s the Snowball Method, Avalanche Method, or another tactic, our experienced team will be there to answer your questions and set you up to successfully begin tackling your debts.

Tackling Your Debts

No matter the method you choose to pay down your debt, the most important thing you can do is stay committed to your goals.

Paying down your debt can help boost your credit score and achieve other financial goals. If you’re ready to take the next step towards tackling your debt, we can help. Check out our Cashflow Accelerator to see how we can help organize your budget and find extra cash each month to put towards your debts.


Leah Roberts

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