If you are facing insurmountable amounts of credit card debt, the first thing that you need is a plan. Having a solid financial plan in place for dealing with your debt will help you get it under control so you can move forward into a stable financial future.
One popular method for paying off credit card debt is the avalanche method. According to Experian, the avalanche method is where you start paying off the debt with the highest interest rate first.
How does it work?
Essentially, the theory behind the debt avalanche method is paying off the most expensive debts will give you returns on your money much faster. The vast majority of loans and credit cards will charge you interest on top of the money that you have borrowed. Loans that have higher interest rates will end up costing you more money over time then loans with lower interest rates.
This is why the avalanche method goes after the high interest debts first. Overall, you will spend less money if you go with the debt avalanche method.
What are the negatives?
Sometimes, the debt with the highest interest rate is not always the smallest debt. This means that with the avalanche method you may be stuck with multiple debts for longer, or that the first debt may feel like you are never going to eliminate it. Losing motivation can mean stopping following the plan entirely.
Some people respond better to multiple small victories, which is where the snowball method of going after the smallest debt first may be a better approach.