3 Debt Repayment Strategies to Get out of Debt Fast in 2025
By
Dawn Chew
|
Updated 06 Jan 2026
3 minutes
At a glance
Ever felt the crushing weight of debt that makes even the simplest financial decisions feel like a high-wire act?
Did you know that improving your credit score by just a few points could potentially save you thousands in interest over time?
So, if you’re looking for practical tips to get out of debt, safeguard your financial future, and perhaps enjoy a little more financial freedom, you’re in the right place.
1. Debt Snowball Method
The Debt Snowball Method could be just what you need to kick-start your journey towards financial freedom. This method focuses on paying off your smallest debts first, giving you the quick wins you need to boost your motivation.
Here’s how it works:
You list all your debts from the smallest amount to the largest, regardless of the interest rates.
Your primary goal is to pay the minimum on all debts, except for the smallest one, which you attack with as much extra payment as you can muster. Once the smallest debt is paid off, you take the amount you were paying on that debt and add it to the minimum payment on the next smallest debt. This way, the amount you are paying towards your debts snowballs as you move from the smallest to the largest, building momentum as each balance is wiped clean.
The beauty of the Debt Snowball Method lies in its simplicity and psychological wins. Each debt paid off is a victory, a concrete step towards financial clarity. This method simplifies the repayment process because it reduces the number of debts you actively focus on at any one time. As you clear each debt, the administrative burden decreases, and the sense of achievement grows. By seeing debts disappear one by one, you’re likely to feel more in control and empowered, which can change how you handle finances in the long run.
Start small, gain momentum, and watch as your debt mountain becomes a molehill, one small victory at a time.
2. Debt Avalanche Method
If you’re looking to tackle your debts in a way that saves you the most money in interest charges, the Debt Avalanche Method might be the strategy you need.
This approach prioritises paying off your debts, starting with those that have the highest interest rates. It’s a method that focuses not just on reducing the number of debts, but on decreasing the amount of interest you pay over time.
Here’s how you can implement the Debt Avalanche Method:
Start by listing all your debts in order of their interest rates, from highest to lowest.
Continue making the minimum payments on all your debts, but focus any extra money you have on the debt with the highest interest rate. Once this debt is fully paid off, move on to the debt with the next highest interest rate, applying the total payment amount from the first debt (the minimum plus any extra) to the second.
This process continues, like an avalanche growing in size and speed, until all your debts are cleared. This method is highly strategic and mathematical, designed to reduce the total cost of your debt over time. By tackling the most expensive debts first, you minimise the total interest accumulated. It’s particularly effective if you have debts with significantly high interest rates, such as credit card debts or certain personal loans.
The Debt Avalanche Method requires discipline and patience, as it might take longer to see your first debt fully paid off compared to the Debt Snowball Method. However, the savings on interest can be substantial, making this a smart financial decision for those who can stick with it.
3. Debt Consolidation
Debt consolidation can be a powerful strategy if you’re juggling multiple loans or credit card balances and want to streamline your repayment process.In simple terms, debt consolidation involves combining several debts into a single loan or credit facility.
Instead of making multiple payments to different creditors every month, you make one consolidated payment. This can be easier to manage and might even save you money if you secure a lower interest rate.
Start by assessing all your outstanding debts, including their interest rates, repayment terms, and monthly payments.Then, look for a consolidation option that offers a lower interest rate than the average of your current debts. Common tools for debt consolidation include personal loans, balance transfer credit cards, or even refinancing options.
For example, if you have three credit cards with interest rates ranging from 20% to 26% and qualify for a personal loan with a 10% interest rate, consolidating your credit card debts into the loan can significantly reduce the amount you pay in interest.
This way, more of your payment can go towards reducing the principal instead of just covering interest, potentially allowing you to clear your debt sooner.
Latest Personal Loan Rates
| Lender | Annual Interest Rate | Effective Interest Rate | Processing Fee |
|---|---|---|---|
| Trust Bank | 1.56% | 3.00% | $0 |
| Standard Chartered | 1.60% | 3.07% | $0 |
| GXS | 1.60% | 3.00% | 1.35% of approved loan |
| HSBC | 1.83% | 3.50% | $0 |
| CIMB Bank | 1.86% | 3.56% | $0 |
| OCBC Bank | 1.98% | 4.19% | 1.0% of approved loan |
| DBS | 1.99% | 4.17% | $100 |
| POSB | 1.99% | 4.17% | $100 |
| Maybank | 2.86% | 5.24% | $200 |
| Citibank | 3.45% | 6.50% | $0 |
| OCBC Bank | 5.42% | 10.96% | $200 |
Conclusion
So, there you have it – a comprehensive guide to not only becoming debt-free but also ensuring you stay that way and build a strong financial future.
We’ve walked through various strategies, from the debt snowball and avalanche methods for clearing your debts to debt consolidation.
Remember, the key to maintaining financial health is not just in how much you earn, but in how wisely you manage your resources.
Smart budgeting and spending habits are your best tools for staying debt-free.
Stay proactive about your finances, and you’ll not only keep debt at bay but also grow your wealth over time!
This article was contributed by Dollar Bureau. The author, Firdaus Syazwani, is the founder of Dollar Bureau – a platform focused on simplifying personal finance and insurance information. While we value their expertise, this content represents the author’s independent views and research.
