It’s a brand new year—a time for fresh starts, bold goals, and a renewed focus on what matters most and to Get Your Priorities Straight. If one of your resolutions is to take control of your credit card debt, you’re not alone. Millions of people are looking to improve their finances, and having a clear strategy is the key to turning your goals into reality.

When it comes to paying off credit card debt, there are three proven methods:

• Snowball Method: Start with the smallest debt for quick wins.
• Avalanche Method: Focus on the debt with the highest interest rate to save more interest than Snowball.
• GPS Method: An innovative, strategic approach that balances credit utilization and zero-interest transfers to reduce interest up to 25%, allowing you to pay off debt up to 33% faster while improving your credit score up to 110 points.

In this post, we’ll compare all three and show you why the GPS Method is the most efficient path to debt freedom.

---

The Snowball Method

Start with the smallest debt for quick wins.

• How It Works: Pay off the smallest debt first while making minimum payments on larger debts. Once the smallest debt is cleared, roll that payment into the next smallest debt.
• Pros: Builds motivation through seeing smaller debts paid off.
• Cons: You could end up paying more in interest over time since larger, high-interest debts are addressed later. Not very efficient.

Example:
If you have three debts: $500, $1,000, and $2,500, you pay off the $500 debt first. Seeing that balance hit zero can create momentum to keep going.

Best For: Individuals who need a simple approach to see the progress of small debts getting paid off faster to stay motivated.

---

The Avalanche Method

Focus on the debt with the highest interest rate to save more interest than Snowball.

• How It Works: Focus on paying off the debt with the highest interest rate first while making minimum payments on the others. This approach saves more interest than the Snowball method. 
• Pros: Reduces total interest paid.
• Cons: Progress can feel slow, especially if the debt with the highest interest rate has a large balance. More efficient than Snowball but still not very efficient.

Example:
If you owe $3,000 at 20% interest and $1,000 at 10% interest, you tackle the $3,000 first, even though it’s considerably more, and pay the minimum due on the $1,000. It saves you money on the highest interest.

Best For: Individuals who want a simple approach to paying off high-interest cards first and who can stay disciplined.

---

The GPS Method

An innovative strategic approach that balances lowering credit utilization across all credit cards so that the highest utilization rates come down. Utilization rates are a big factor in your credit score. This method increases your credit score while paying off debt. Using zero-interest credit card transfers can reduce your interest by up to 25%, help you pay off debt up to 33% faster, and improve your credit score by as much as 110 points.

How It Works:

• • Lower Credit Utilization Evenly: Focus your payments to reduce your credit utilization evenly across all cards, which can improve your credit score by up to 25-30 points. (There are several approaches to do this quicker in the debt reduction strategy guide, download here.)
  • Apply for Zero Interest Cards: Apply for 2-4 zero-interest balance transfer cards with a 3% transfer fee and an 18-24 month promotional period.
  • Zero-Interest Transfers: Transfer up to 30% of the limit onto the zero-interest cards. Keeping your utilization rate 30% or below will help keep your credit score up. 
  • Focus on Paying Down Principal: With only a 3% fee upfront, any payment going forward reduces the actual debt. 
• Only Use the Cards for Transfers: Any purchases before or after the transfer can be charged at 25% or more, and the payments only go the the zero Interest balance.

Why It Works:

• Credit score improvement: Opens up the ability to qualify for more credit and larger-limit credit cards. If you transfer 30% of the limit, you have more money to transfer.
• Saves money: Reduces interest from 25%+ to an effective 2% over an 18-24 month period.
• Pays off debt faster: Much more of the payment goes toward the principal.

Pros:

• Is the most efficient method by far.
• Improves your credit score while paying down debt.
• Reduces interest up to 25% depending on the current rate and saves lots of money.
• Up to 33% faster way to get out of debt.
• Maximizes principal payments to achieve faster results.
• Provides a clear, structured plan for success.

Cons:

• If are used to living above your means, you will have more credit and could increase your debt. If you don’t change your spending habits, this will happen.
• If you use the balance transfer cards for purchases, you could be charged 25% or more interest. All the payments go to the zero-interest balances.
• In 18-24 months, the interest rate goes to 25% or more, and you need a plan to get additional cards or save the money to pay off the balance by the end of the promotion.

Create a spending plan to make sure you are living within your means. Monitor your credit score regularly using tools like Credit Karma to track progress.

Example:
If you have three cards with high balances, evenly reducing utilization across all of them can boost your credit score. Once improved, consolidate some of the debt onto zero-interest cards (no more than 30% utilization) and focus on further reducing utilization rates on other high-interest cards. The 3% fee is added to the first statement, and then no interest is charged during the promotional period. This results in an effective 2% annual interest rate.

A credit card with a $5,000 balance and a payment of $200 per month:

1. 2% annual interest (low interest): It will take approximately 26 months (a little over 2 years) to pay off the $5,000 balance.
2. 25% annual interest (high interest): It will take approximately 36 months (3 years) to pay off the balance. ​

This method saves $1,600 more than the Avalance and Snowball methods. If you had a $10,000 balance and paid $400 per month it would save $3,200.

Best For: Individuals looking for a strategic approach that combines being able to pay off debt 33% faster than Snowball or Avalanche due to a significant interest reduction of up to 25% with the additional benefit of improving your credit score by up to 110 points.

---

---

Choosing the Right Method

Choosing the right debt payoff strategy depends on your financial goals and personality:

• If you need a very simple strategy that eliminates smaller debt faster to stay motivated, start with the Snowball Method.
• If a simple strategy of paying off the high-interest cards first is your top priority, go with the Avalanche Method. 
• The GPS Method is the best choice if you want the fastest method to save the most interest and pay off debt faster while improving your credit score.

Take a moment to assess your debt, goals, and mindset. Remember, the right plan is the one you can stick to.

---

There isn’t a one-size-fits-all approach when it comes to paying off debt. While the Snowball Method builds motivation and the Avalanche Method pays down the highest interest first, the GPS Method gets better results: Significantly reduced interest (up to 25%), faster debt payoff (up to 33%), and improved credit scores (I have seen as high as 110 points).

If you’re ready to take control of your debt and see real results, the GPS Method can get you there. Let’s make debt freedom your reality.