Credit Information and Personal Finance Resources | Credit One Bank

Credit One CentralTM

Explore ways to manage your credit and finances with Credit One Central. These informational articles and resources can help guide you in your everyday life.

Cool Debt-Reduction Strategies

Cool Debt-Reduction Strategies

Most folks who find themselves overwhelmed by debt didn’t plan on being there. Which is why taking the opposite approach and having a solid plan to get out of debt makes good sense. But there are lots of debt-reducing strategies out there, so which one is right for you?

While there is no one “right” strategy, three of the more popular approaches for paying down debt use “snow” metaphors to describe the process. They are all proven methods, but just as everyone didn’t get into debt the same way, everyone won’t get out the same way. Consider each of the following snowy debt-reducing strategies in deciding which method might best help you crystalize your own plan to start melting away your debt.

1. The Snowball Approach

  • Pro: Provides short-term victories that inspire and motivate

  • Con: Could take longer and cost you more in interest than the “avalanche” method

This method—just like a snowball rolling down a snowy slope and getting bigger—is all about gaining momentum. It relies on you achieving smaller victories up front and then building off of your debt-eliminating successes. The key to this approach is focusing first on paying off your smallest debts before concentrating on your larger, harder-to-move-the-needle-on debts.

Let’s say you have four debts that total $20,000: $10,000 owed on your car, an $8,000 student loan, a $1,500 outstanding balance on your credit card, and a $500 medical bill. With the snowball method, you would make the minimum payments due on the first three accounts and then use any discretionary funds in your budget to pay more than the minimum on the medical bill in order to eliminate it, the smallest debt, first.

Once the medical debt is gone, you would continue to make minimum payments on your car and student loan while applying funds you’ve saved by eliminating your medical bill toward paying more than the minimum due on your credit card balance—now your smallest debt—in order to pay it off next. Once it’s gone, your student loan gets more funds until you only have a car payment left, which you pay off as soon as you can with all of the freed-up capital you now have from eliminating all your other debts!

This method is more about modifying your behavior than it is about crunching the numbers. And the more success you experience with this plan, the more you should be willing to modify your behavior to achieve even more success!

As financial guru Dave Ramsey, a major proponent of the snowball method, suggests, part of your behavior modification should be to find ways to cut costs and bring in extra income—say, by cutting out your expensive morning latte or picking up a side job—in order to build momentum from your snowballing efforts even quicker.

2. The Avalanche Method

  • Pro: Could save you more money and eliminate debts faster than the “snowball” approach

  • Con: Immediate success is less visible—especially if your highest-interest debt is also your largest—which could affect motivation

With the avalanche approach, it’s all about the interest rates you’re paying. You figure out which debt is charging you the highest interest rate and concentrate on paying it off first. This could save you a substantial amount of money because compound interest rates can cause the total amount of interest due on your debt to add up fast.

Say you have the same debt mix and total amount owed as above, but the interest rates you’re paying are as follows: 6% on the $10,000 car loan, 8% on the $8,000 student loan, 17% on the $1,500 credit card balance, and 5% on the $500 medical debt. The avalanche method works similar to the snowball method, only the smallest balance doesn’t get paid off first—unless it’s also the highest-interest-rate debt.

Using this approach, you would make minimum monthly payments on your car loan, student loan, and medical debt and use any discretionary funds in your budget to pay more on your outstanding credit card balance until it’s paid in full. Then, once your credit card debt is eliminated, you would continue paying the minimum due on your car loan and medical debt while focusing on paying more on your student loan until it is paid off. The process continues until you’ve eliminated all of your debts, having knocked them off one by one in the order of highest to lowest interest rate.

Just like with the snowball plan, it’s important to find savings and bring in extra income any way you can to keep the process and momentum going—so behavior modification is still important. But math plays a larger role in this method because you want to get rid of highest-interest-rate debts as soon as possible to hopefully save on the amount of total interest paid.

3. The Snowflake Plan

  • Pro: Finds day-to-day savings and is compatible with either of the above methods

  • Con: More of a supplemental plan than an actual strategy

The same way actual tiny snowflakes quickly add up to inches or even feet of the fluffy white stuff, debt snowflakes accumulate to help you chip away at your debt. With this supplemental plan, it’s all about looking for small, steady contributions to achieve your goal of becoming debt free.

Find a $20 bill in a pair of pants you haven’t worn in a few months? Apply it toward your outstanding credit card balance. Have a garage sale and make $300? Use it to make an extra payment on your car for that month. Save $15 on groceries this week from using coupons? Go ahead and throw that cash in a jar reserved for paying off that $500 medical bill and pay a little extra on it this month.

With the snowflake plan, it doesn’t matter whether you’re focusing on paying higher-interest debts or smaller-balance debts first. The point is you’re directing small windfalls you might otherwise not pay attention to toward reducing outstanding balances, which should help melt your debt away faster.

Concentrate On Minimums to Maximize Your Efforts

It’s important to emphasize that, no matter which of these methods you use, you must continue to make at least minimum payments on all of your debts. In other words, don’t think you’ll find the money to pay off the debt you’re concentrating on by not making any payments on the rest of your debts. If you take this approach, your other debts will become past due, and your credit score will almost certainly take a hit.

Budget enough to cover the minimum payments on all of your debts and then find extra money to pay down the debt in your sights by cutting expenses, “snowflaking,” or increasing your income with a side hustle or earning money from a hobby.


« Return
This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.
Credit One Bank Testimonials

Customer Testimonials & Success Stories

Looking to reach your financial goals? See how Credit One Bank helps people purchase a house or car, handle emergencies and build their credit.

Read More

See If You Pre-Qualify Today

With a Credit One Bank Platinum Visa®, you'll earn 1% cash back on eligible purchases, terms apply, and receive many benefits like free online access to your credit score and $0 Fraud Liability.

In less than 60 seconds, find the card that's right for you!

Credit One Bank Credit Card

 Terms of Use 

Credit One Bank maintains our various websites (hereinafter referred to as "website") as a service to our customers and visitors in order to provide information about products and services and to facilitate communication with us. We require that all customers and visitors to our website adhere to these Terms of Use. By accessing our website and any of its pages, you indicate your acknowledgement and acceptance of the Terms of Use set forth herein without limitation or qualification. We may revise the Terms of Use at any time by updating this posting. You should therefore visit this posting to review the Terms of Use from time-to-time as you visit the website. For the purposes of these Terms of Use, references to Credit One Bank include its affiliates, directors and employees.

COPYRIGHT - The information and materials contained in the website, including but not limited to text and images herein (excluding certain images licensed from third parties) and their arrangement are © Copyright 2015 by Credit One Bank. The information and materials contained in the website may not be copied, displayed, distributed, licensed, modified, published, sold, used to create derivative work or otherwise used for public or commercial purposes without the express written permission of Credit One Bank.

LIMITATION OF LIABILITY - We use our best efforts to include accurate and up-to-date information and materials on the website, however, information and materials on the website are provided "as is" without any warranty of any kind, either express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose and non-infringement. Furthermore, we make no representations as to the accuracy or completeness of the information. The information and materials on the website may include technical inaccuracies or typographical errors. From time-to-time we may amend, change, add, delete, update or alter the information and/or materials contained in the website, including information regarding the products and services described or offered on the website, without notice. We assume no liability for any errors or omissions in the information or materials contained within the website and expressly disclaim any responsibility to update the information or materials contained within the website. By using the website, you acknowledge that we specifically disclaim any liability for any direct, indirect, special, unsolicited or consequential damages, losses or expenses arising out of your access to or use of the website, even if we have been advised of the possibility of such damages, including liability associated with any viruses or software which may impact a user's equipment.

GOVERNING LAW - You agree that your use of the website shall be governed by all applicable Federal laws and the law of the state of Nevada.

INFORMATION SUBMISSIONS - All information and materials (including but not limited to feedback data, documents, questions, comments, and suggestions) you submit to us via the website or email shall be deemed to be the property of Credit One Bank and may be used by us in a manner consistent with our Privacy Policy. We shall be free to reproduce, use, disclose, exhibit, display, transform, create derivative works and distribute this information and materials to others without limitation. Furthermore, we shall be free to use any ideas, concepts, know-how or techniques contained in such information or materials for any purpose whatsoever, including but not limited to developing, manufacturing and marketing purposes. Application information submitted to us shall be treated confidentially to the extent required by applicable law or as disclosed in the application and/or supporting materials.

ADVERTISING DISCLOSURE AND LINKS TO OTHER WEBSITES - We do not provide, endorse, nor guarantee any third-party product, service, information, or recommendation available through links from this website. The third parties providing products and services available through this website are not affiliated with us and are solely responsible for their products, services, information, recommendations, and all other content on their websites. We shall not be held liable for any third party's failure with regard to such advertised products, services, and benefits. Many of these advertised products and services are not FDIC insured, nor bank guaranteed. By responding to offers advertised on this website, you may be communicating information about yourself to the company that provides such product or services - for example, that you are a Credit One Bank customer. Please be aware that these third parties may have a different privacy policy than ours. Their website(s) may also provide less security than ours. We encourage you to check individual offers, products, and services to become familiar with any applicable restrictions or conditions.

 Security & Fraud  

We are committed to protecting the security of your personal information. We list some activities below that we perform in order to safeguard your data and some tips that you can follow to protect your security.

What We Do:

  • We employ industry-proven standards and technologies to protect information in our computing environment.
  • We protect our systems and networks from the Internet with Firewall systems.
  • We use 128-bit SSL encryption technology to protect sensitive information that is transmitted over the Internet.
  • We maintain a Global Digital Certificate signed by Verisign® that assures you are, in fact, communicating directly with Credit One Bank.
  • We control access to your information inside our company by limiting employee access to systems and data.

What You Should Do:

  • Protect your Username and Password. Avoid choosing easily guessed words or numbers. Avoid writing your Sign In information in a place where others can view it.
  • Use the "Sign Out" button to Sign Out from Online Account Access upon completion of your session and close your browser.
  • Do not use email for account-specific questions. Email is not normally encrypted and your account information could be intercepted.
  • Review your statement information regularly for unauthorized transactions.

Alerts Regarding Phishing and Web-Spoofing:

  • Phishing is an Internet scam (spoof) in the form of an email or pop-up box. The emails and pop-ups link to sites that look like well-known legitimate businesses and ask you to provide and confirm personal, financial, or password information.
  • Legitimate businesses do not ask for this information unless you initiate a request for a service. Please DO NOT RESPOND to these emails requesting personal identity, accounts or password information.
  • Scam emails often contain misspelled words, poor grammar, awkward or unprofessional writing and typos.
  • Be suspicious of urgent or alarming appeals that request security information.

Fraud Alerts:

  • Credit One Fraud Alerts messages are provided to you at no cost. You will not be charged for alerts received.
  • Message frequency varies, as they are only sent when there is suspicion of fraud.
  • Mobile carriers are not liable for delayed or undelivered messages.
  • For help send HELP to 89283.
  • Send STOP to 89283 to end future fraud alert messages.
  • For support contact us at 1-877-825-3242.

To learn other ways to avoid email scams and deal with deceptive spam visit the Federal Trade Commission site at


You are leaving

If you the 'Continue' button, you will be directed to a third-party website unaffiliated with Credit One Bank, which may offer a different privacy policy and level of security. Credit One Bank is not responsible or liable for, and does not endorse or guarantee, any products, services, information or recommendations that are offered or expressed on other websites.

the 'Return to' button to return to the previous page or 'Continue' to proceed to the third-party website.

Return to Continue