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Debt can be overburdened. Whether you have attractive compensation on your credit card or a long-term loan, it can snatch away your peace of mind. Even if you have been paying down your debt on time, it seems scary because you never know when your financial situation is turned upside down. 

If you have taken on multiple debts and are now struggling to stay organised, you may be confused about choosing a repayment plan. There are two most popular repayment methods that you all know but how to choose them is a big question. 

Some people do not ponder over the pros and cons and end up worsening their situation, and this further pushes them on the edge of debt. If you are multiple debts, first off, you create a list of debts. 

Jot down all types of debts you are to pay down – credit card bills, personal loans, auto loans, legit loans for bad credit in Ireland, etc. Write the total money you owed on each debt and monthly payments due every month, and the interest rate. 

Tips for choosing the right debt repayment plan 

The primary purpose of choosing a repayment plan is to reduce the interest rate. Interest rate matters a lot when you are to choose between payment plans. Before you know about them their pros and cons, you should know the other two crucial ways to lower the interest rates. Here are they:

Balance transfer 

If you struggle with managing multiple credit cards, you do not need to prefer the debt snowball or the debt avalanche procedure. Balance transfer will be an ideal choice.It helps transfer outstanding debt of old credit card accounts to a new one. 

The purpose of moving your old balance to a new credit card is to get lower interest rates or to avail of a 0% introductory balance transfer credit card. It means no previous interest rates will be applicable. 

Now you will pay off the balance with either little or no interest provided you clear the entire balance within the interest-free period, a nice way to save money. This may seem simple, but getting a 0% introductory credit card is not easy. 

First of all, we will evaluate your credit score to review your eligibility. You may not smell a rat at the time of applying for this type of credit card, but you will likely be paying almost the same amount of money in total, even though interest rates are lower. 

This is because the transfer fee is levied when you put in the request for cub cards. It is intrinsic to mull over the introductory period because you will be paying a very high-interest rate as it expires. A credit card with a small introductory period may not be worthwhile for saving money. 


Refinancing is another option which is generally suitable for long-term loans. For instance, if you took on an auto loan and a mortgage and you are grappling with monthly payments, you can refinance these loans. Refinancing will allow you to replace your existing debt with a new one. 

This becomes possible only when you have been making all payments on time. Refinancing will increase the duration so that it will whittle down monthly payments. 

Refinancing seems to be very affordable as your monthly payments get reduced, and your loan is revised at new interest rates that are more affordable. Still, you will likely be paying off more money in total. When refinancing, you should scrutinise how much you will be paying. If it is just a small amount, it does not matter, but you should deliberate if it makes a lot of difference.

Debt repayment plans

Coming to debt repayment plans now, they work differently for each individual as they all have different financial conditions. Before you choose a debt repayment plan, you should find the answer to these questions:

How much money can you arrange each month to pay off the debt?

You will have to make the minimum payments to keep the ball rolling, but you will still accrue interest. To actually get rid of debt, you should take some time to evaluate the substantial progress. Evaluate how much extra money on top of minimum payments you can make. 

Which debt will you pay off first?

Before you decide on the repayment plan, you should know how you will prioritise your debts. By knowing this, you can choose the right approach to get rid of debt. 

Debt snowball and debt avalanche methods

You must have heard about two very common repayment strategies: debt snowball and debt avalanche. The first strategy focuses on balance. 

This philosophy suggests clearing the lowest balance while making minimum payments on other debts. The avalanche strategy suggests paying off debts with high-interest rates first. Look at the table below:

  Debt Avalanche Debt Snowball
Pros You will save money on interest. It is a motivating strategy.
  You will get rid of the debt faster. It is suitable when you want to lower the number of loans quickly.
Cons It takes more discipline to stick to the payment method. It will take a longer time.
  The highest interest debt may have the highest balance, so it can take a bit longer to settle the dues. You will be paying more interest in total.

The bottom line

Picking the right debt repayment strategy is not easy at all, and each has its own pros and cons. You will have to look over your financial condition to find out if the plan you choose will work even in the future until you get rid of the entire debt.

It is suggested to take on debt only when there is an emergency. Financial irresponsibility is generally an issue with most people who throw themselves into a debt trap. Build an emergency cushion and create a budget to track spending so you do not take on more than your affordability.

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