The Ultimate Guide To Helping You Pay Off Your Debts Faster In 2023

Reports show that the average American has around $96,371 in debt, according to Experian’s Consumer Debt Study. This includes credit card balances, mortgages, and student loans. Regardless of the type or amount of debt you have, it could result in a severe financial crisis and affect your FICO Score — the three-digit number lenders use to evaluate your creditworthiness.

While there are terms and timelines to repay the debts, here are some tips to help you make your payments faster.

List Off Your Debts

Understanding your active debts helps you know how many payments you need to make, making it easier to plan and track. You should include the following information for every debt you list.

• The type of debt, for example, student loan or credit card
• Debt account or name
• Balance
• Minimum monthly payment
• Interest rate (APR)
• Payment length and terms
• Payment due dates

You can write the debts from the ones with the highest balance or interest rate. Free tools like Mint, Credit Karma, or a simple Google Sheets spreadsheet make organizing your debt inventory straightforward. While it can be overwhelming when you have a lot of debt, staying organized is the critical first step recommended by the Consumer Financial Protection Bureau (CFPB).

Why Tracking Your Debt-to-Income Ratio (DTI) Matters

When listing your debts, it’s worth calculating your debt-to-income ratio (DTI) — the percentage of your gross monthly income that goes toward debt payments. Lenders like Chase, SoFi, and most banks use DTI as a key qualification metric. According to the CFPB, a DTI above 43% makes it significantly harder to qualify for new loans or refinancing. Keeping your DTI below 36% is considered healthy by most financial institutions, including those regulated by the FDIC.

To calculate your DTI: divide your total monthly debt payments by your gross monthly income and multiply by 100. For example, if you pay $1,500/month in debts and earn $5,000/month before taxes, your DTI is 30%.

Choose a Debt Repayment Strategy

Having a strategy makes it easy to remain organized and gives you a plan. The following are the most common strategies depending on the amount and types of debt you have.

Snowball strategy
This strategy involves paying off your small debts first, giving you momentum to pay off the bigger ones. Popularized by personal finance author Dave Ramsey, the snowball method is backed by behavioral economics research from Harvard Business Review, which found that paying off individual accounts entirely creates a stronger psychological motivation to continue. If you use this strategy, list your debts from the ones with the smallest balance to the ones with the largest.

While paying off these small loans, ensure you keep up with the minimum payments on all other bills and loans. If you have leftover money, direct it to finish the small debts.

The debt avalanche
This strategy includes paying off debts, starting with the ones with the highest APR (Annual Percentage Rate). Like the snowball strategy, ensure you make minimum payments on other debts.

This strategy helps you save a lot on interest and gives you more peace of mind knowing the enormous burden is out of the way. Given that the Federal Reserve reports average credit card interest rates above 21% as of early 2026, targeting high-APR balances first can save thousands of dollars over a repayment period.

Debt Repayment Strategy Comparison

*Estimated savings based on a $10,000 debt balance at 21% APR over 36 months. Individual results vary based on balance, rate, and payment amounts. Data synthesized from Bankrate, NerdWallet, and CFPB resources (2025–2026).

Debt Consolidation

Managing debts from different accounts is challenging, and this strategy involves combining all your debts into one big one. The goal is to streamline your payments, which could help you settle the debt faster and reduce the interest rate. According to Bankrate’s 2025 debt consolidation report, borrowers who consolidate successfully reduce their effective interest rate by an average of 5–7 percentage points.

The following are ways to consolidate your loan.

Balance transfer cards
Also known as credit card refinancing, this consolidation option allows you to transfer your credit card balance to a balance transfer card. These cards usually have a 0% introductory APR period, typically 12–21 months, meaning you can pay off the debt interest-free. Popular options include the Citi® Diamond Preferred® Card and the Chase Slate Edge℠, both of which have offered competitive 0% APR windows.

While most of them don’t have an annual fee, you might have to pay 3–5% of the amount you transfer as a transfer fee. Therefore, before you apply for the transfer card, ensure the interest you save will not go towards the fee.

Another downside is that you need a high FICO Score — typically 700 or above — to qualify for most transfer cards. If the transfer card has a low credit limit, it might be impossible to transfer your entire debt balance.

Home equity loan
Home equity loans are secured loans that let you borrow against your home’s equity, typically at fixed rates significantly lower than credit card APRs. As of early 2026, the average home equity loan rate sits near 8.5%, according to Bankrate’s home equity rate tracker. This consolidation method is suitable if you have large debts, but remember: your home serves as collateral, meaning failure to repay could result in foreclosure.

Personal loan
These are unsecured and fixed-rate loans that you can get from a bank, credit union, or online lender such as SoFi, LightStream, or Marcus by Goldman Sachs. You can use the money to consolidate credit card debt or other small and big loans. The amount and interest rate of the loan depend on your FICO Score and credit history. According to NerdWallet’s 2025 personal loan rate data, borrowers with excellent credit (720+) qualify for rates as low as 7–10% APR, compared to 20–25% APR for those with fair credit.

Debt management plan
This option, often facilitated by nonprofit credit counseling agencies accredited by the National Foundation for Credit Counseling (NFCC), involves negotiating with creditors to combine your debts into a structured plan with reduced interest rates. It is a good option if you are carrying significant debt and want to avoid filing for bankruptcy under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code.

Pay More Than The Minimum Payment

While every creditor indicates a minimum monthly payment, you can make an extra payment that goes directly toward the principal balance. This will help you settle your debt faster, saving you more money on interest in the long run.

To illustrate: on a $5,000 credit card balance at 21% APR, paying only the minimum (~$100/month) would take over 8 years and cost approximately $4,300 in interest alone. Increasing your monthly payment to $200 would reduce the repayment period to just under 3 years and save roughly $3,000 in interest, according to CFPB’s debt repayment calculators.

However, ensure you read the loan terms carefully because some lenders have prepayment penalties for early repayments — particularly on certain auto loans and personal loans. Always confirm with your lender before making lump-sum payments.

How to Find Extra Money to Put Toward Debt

Finding extra funds to accelerate debt repayment doesn’t always require drastic lifestyle changes. Here are several practical, data-backed approaches:

• Apply tax refunds to debt: The IRS reports the average federal tax refund in 2025 was approximately $3,167. Directing even half of that to a high-interest balance can meaningfully accelerate your payoff timeline.
• Monetize unused assets: Selling unused items through platforms like eBay, Facebook Marketplace, or Poshmark can generate $200–$1,000+ in one-time income.
• Negotiate a raise or take on a side gig: The gig economy — platforms like Uber, Fiverr, and Upwork — can generate $300–$1,500 per month in supplemental income, according to a 2025 survey by Bankrate.
• Request a lower interest rate: Simply calling your credit card issuer — whether that’s Chase, Citi, Capital One, or American Express — and asking for a rate reduction can work. Bankrate reports that approximately 76% of cardholders who asked for a rate reduction in 2024 received one.

Have a Budget

Having a budget guides you on how you use your money. It also helps you identify where you use cash unnecessarily, making it easier to reduce unhealthy spending and dedicate that money to debt repayment. The Federal Reserve’s 2024 Report on the Economic Well-Being of U.S. Households found that adults who maintain a budget are 30% more likely to report being financially comfortable than those who do not.

When creating a budget, always list your income after tax and your fixed plus variable expenses. There are several proven methods to develop a budget based on your income and spending habits.

50:30:20
This budget strategy, popularized by U.S. Senator Elizabeth Warren in her book All Your Worth, states that you set aside 50% of your after-tax income for needs, 30% on wants, and 20% on savings or debt repayment. You can adjust the percentages based on your financial standing — for example, a 50/20/30 split that prioritizes debt repayment over discretionary spending is common among aggressive debt payoff plans.

Envelope method
This cash-based strategy involves having a physical or digital envelope for every spending category and filling it with the allocated amount. Once the money from one envelope runs out, you cannot add money from another. Apps like YNAB (You Need A Budget) and Goodbudget digitize this approach for modern spenders.

Zero-based budgeting
In this method, you must allocate every single dollar of your income to a specific purpose — expenses, savings, or debt — until the remaining balance equals zero. This approach, used by major corporations and advocated by financial coaches, ensures no money is left unaccounted for and maximizes intentional debt repayment. Tools like YNAB and EveryDollar are designed specifically for zero-based budgeting.

Using Technology to Automate Debt Payments

One of the most effective yet underutilized debt repayment tactics is automation. Setting up automatic payments through your bank — whether that’s Chase, Bank of America, Wells Fargo, or an online bank like Ally — ensures you never miss a due date, avoiding late fees that typically range from $25 to $40 per occurrence. Many lenders, including SoFi and Discover, also offer a 0.25% APR discount for enrolling in autopay, which compounds meaningfully over a multi-year repayment period.

Additionally, setting up automatic “round-up” savings through apps like Acorns can passively generate small amounts of additional cash that can be redirected toward debt. While not a primary strategy, behavioral finance research supports the value of frictionless saving and paying mechanisms for sustaining long-term debt repayment habits.

Avoid More Debts

Avoid taking out another loan or increasing debt when you are in repayment mode. This means you must stop using your credit card to accumulate new balances. You can use a prepaid credit card if you don’t like carrying cash around.

This is a card where you load money, and when it runs out, you must reload it. Prepaid cards from providers like Green Dot or American Express Serve also help keep your money safe because once you lose it, you only lose the money already loaded — unlike traditional credit cards, which expose you to potential fraud liability.

You should also remove your credit card details from online stores. Online shopping can significantly hinder your debt repayment because purchases are too frictionless. Research from the Federal Reserve’s 2024 consumer spending study found that stored payment credentials in online accounts increase unplanned purchase frequency by approximately 23%.

Monitor Your Credit Score Throughout Repayment

As you pay down debt, tracking your FICO Score and VantageScore provides measurable evidence of your progress. Your credit score is composed of five key factors, according to FICO’s official credit education resources:

• Payment history (35%): On-time payments are the single largest factor. Missing even one payment can drop your score by 50–100 points.
• Amounts owed / Credit utilization (30%): Keeping your utilization below 30% — and ideally below 10% — significantly boosts your score. Paying down balances directly improves this metric.
• Length of credit history (15%): Older accounts help; avoid closing old accounts when consolidating.
• Credit mix (10%): Having a mix of revolving (credit cards) and installment (loans) accounts is beneficial.
• New credit inquiries (10%): Applying for new credit temporarily lowers your score. Minimize applications while in debt repayment mode.

Free credit monitoring is available through Experian, Credit Karma (which uses TransUnion and Equifax data), and through many credit card issuers. The CFPB also provides a free annual credit report tool at AnnualCreditReport.com, which is federally mandated by the Fair Credit Reporting Act (FCRA).

When to Seek Professional Debt Help

If your total unsecured debt exceeds 40% of your annual income, or if you are regularly missing minimum payments, it may be time to seek professional assistance. Here are the main options:

• Nonprofit credit counseling: Agencies accredited by the NFCC or the Financial Counseling Association of America (FCAA) offer free or low-cost debt counseling and can help you establish a Debt Management Plan (DMP). Typical DMP fees are capped at $79/month under NFCC guidelines.
• Debt settlement companies: These for-profit firms negotiate with creditors to accept less than the full balance. Be cautious — the Federal Trade Commission (FTC) warns that many debt settlement companies charge high fees and can damage your credit score significantly. Only consider AFCC-accredited firms.
• Bankruptcy: A last resort, bankruptcy — either Chapter 7 (liquidation) or Chapter 13 (reorganization) — can discharge or restructure debts. However, it remains on your credit report for 7–10 years and affects your ability to obtain future credit, according to the U.S. Courts system.
• Student loan-specific programs: For federal student loan borrowers, the U.S. Department of Education offers income-driven repayment (IDR) plans, Public Service Loan Forgiveness (PSLF), and deferment or forbearance options that can temporarily reduce payments.

Conclusion

The key to settling your debt is remaining dedicated and disciplined. Whether you choose the debt avalanche, the snowball method, debt consolidation through a personal loan from SoFi or another lender, or a structured Debt Management Plan through an NFCC-accredited agency, the most important step is to start. If you have a hard time, consult professional help. They will equip you with the financial literacy you need to not only settle your debts but avoid future debts and develop healthy spending habits that protect your FICO Score and long-term financial security.

Frequently Asked Questions

What is the fastest way to pay off debt?

The fastest way to pay off debt is the debt avalanche method — directing all extra funds toward the highest-APR balance while making minimum payments on all others. This minimizes total interest paid and eliminates debt in the shortest mathematically possible time. Combining this approach with a debt consolidation loan at a lower APR can accelerate payoff even further.

How does the debt snowball method differ from the debt avalanche?

The debt snowball focuses on paying off the smallest balance first, regardless of interest rate, to build psychological momentum. The debt avalanche targets the highest interest rate first, saving more money in total interest. Research from Harvard Business Review suggests the snowball method may be better for people who struggle with motivation, while the avalanche is mathematically superior for minimizing cost.

What credit score do I need to qualify for a balance transfer card?

Most balance transfer cards with 0% introductory APR periods require a FICO Score of at least 670–700, and the best offers (longest 0% periods and lowest fees) typically require a score of 720 or higher. Cards like the Citi® Diamond Preferred® Card and Chase Slate Edge℠ are among the most competitive options for eligible applicants.

Does paying off debt improve your credit score?

Yes — paying off debt typically improves your FICO Score, primarily by lowering your credit utilization ratio, which accounts for 30% of your score. Paying off installment loans (like auto loans or personal loans) also improves your payment history and amounts owed. However, closing old credit card accounts after paying them off can slightly lower your score by reducing your available credit.

What is a Debt Management Plan (DMP) and how does it work?

A Debt Management Plan (DMP) is a structured repayment program offered by nonprofit credit counseling agencies, where a counselor negotiates reduced interest rates and a single monthly payment on your behalf. You make one payment to the agency, which then distributes it to your creditors. The CFPB notes that DMPs typically last 3–5 years and are most effective for people with significant unsecured debt (credit cards, medical bills) who want to avoid bankruptcy.

Is debt consolidation a good idea?

Debt consolidation is a good idea when it results in a meaningfully lower APR and simplifies repayment into a single monthly payment. It works best for borrowers with a FICO Score above 670 who have multiple high-interest balances. However, consolidation doesn’t eliminate debt — it restructures it. If you continue accumulating new debt after consolidating, you could end up worse off than before.

How much should I put toward debt repayment each month?

Financial experts, including those at the CFPB and NFCC, generally recommend allocating at least 20% of your after-tax income toward debt repayment and savings. Under the 50/30/20 budgeting rule, 20% covers both savings and debt. If you are in an aggressive payoff phase, temporarily increasing this to 30–40% — by cutting discretionary spending — can dramatically shorten your timeline.

What happens if I only pay the minimum payment on my credit card?

Paying only the minimum on a credit card means the majority of each payment goes toward interest, not principal, dramatically extending your repayment timeline. On a $5,000 balance at 21% APR with a $100 minimum payment, it would take over 8 years and cost approximately $4,300 in interest to pay off. Increasing payments to even $200/month could cut the timeline to under 3 years.

Can I negotiate a lower interest rate directly with my credit card company?

Yes — calling your credit card issuer and requesting a lower interest rate is one of the simplest debt reduction strategies available. According to Bankrate’s 2024 survey, approximately 76% of cardholders who asked for a rate reduction received one. Having a history of on-time payments and a good FICO Score significantly improves your chances. Issuers like Chase, Citi, Capital One, and American Express all have processes for rate reduction requests.

What is the difference between secured and unsecured debt?

Secured debt is backed by collateral (an asset the lender can seize if you default), such as a mortgage (backed by your home) or an auto loan (backed by your car). Unsecured debt has no collateral, including credit card balances, personal loans, and medical bills. Unsecured debt typically carries higher interest rates because the lender takes on more risk. The FDIC and CFPB both recommend prioritizing secured debt payments to avoid losing essential assets like your home or vehicle.