How to get out of debt: A practical step-by-step guide
Debt has a way of feeling permanent. The balances don't move much. The due dates keep coming. And the more you carry, the more it costs you just to stay in place.
This guide lays out the concrete steps to get out of debt: what to assess first, how to choose a payoff method, and when consolidating with a personal loan actually helps.
Step 1: List every debt you owe
Before you pick a strategy, you need a clear picture of your full debt.
Gather your latest statements before you start. Having the actual figures in front of you makes every step that follows more reliable.
For each account, note:
the creditor name
current balance
annual percentage rate (APR)
minimum monthly payment
The APR on each account shows which balances are the most expensive to carry over time. Knowing your APRs helps you decide where to focus first, whether you use the snowball method, the avalanche method, or a debt consolidation loan.
Step 2: Choose a payoff strategy: snowball or avalanche
Both methods follow the same basic approach: make the minimum payment on every debt, then put any extra money toward one account until it's paid off.
Debt snowball: List your debts from the smallest balance to the largest. Pay the minimum on every account, then put any extra money toward the smallest balance. Once you pay it off, roll that payment into the next-smallest debt.
The debt snowball gives you quick wins. Paying off an account early can build confidence and help you stick with your plan. The trade-off is that you may pay more over time because you aren't paying off the balances with the highest APRs first.
Debt avalanche: List your debts from the highest APR to the lowest. Pay the minimum on every account, then put any extra money toward the balance with the highest APR. Once you pay it off, roll that payment into the account with the next-highest APR.
The debt avalanche can help you pay less over time because you focus on your most expensive balances first. The trade-off is that it may take longer to pay off your first account, so it can be harder to stay motivated.
Neither method requires you to borrow more money. Both use the payments you're already making. The key is to stay consistent and keep putting extra money toward one balance at a time.
Step 3: Decide if consolidating with a personal loan makes sense
Here's where the snowball and avalanche methods have a limit: they don't change your APRs.
If you're carrying balances with high APRs, you'll keep paying those rates until the debt is gone. Both methods help you organize your payoff plan, but they can't reduce the cost of carrying your balances.
A personal loan can simplify repayment by replacing multiple credit card balances with one fixed monthly payment and a fixed APR. If you qualify for a lower APR, you could reduce your borrowing costs while following a clear payoff plan.
With Happen Bank, you may qualify for an additional 0.75% to 8% rate reduction when you choose Direct Pay.1
Finding the right path out of debt
The right approach starts with knowing exactly what you owe. From there, snowball or avalanche gives you a structure to work with. If your APRs are high enough that a personal loan would cut your interest costs, consolidation adds a third option.
Check your rate with Happen Bank. It takes seconds and doesn't affect your credit score. 3
Frequently asked questions
What is the fastest way to get out of debt?
The fastest method is whichever one you'll actually stick to. The debt avalanche minimizes total interest, so more of each payment hits your principal. This can be the fastest method if you are consistent.
Can a personal loan help you pay off debt faster?
It can, if the personal loan’s APR is lower than the APRs on your existing debt. A lower fixed APR means more of each payment goes toward principal. With Happen Bank’s Direct Pay, you can get an APR discount of 0.75% to 8% off the standard rate.1
Does using a personal loan to pay off debt with Happen Bank hurt your credit score?
Not necessarily. Using a personal loan to pay off debt doesn't automatically hurt your credit score.
Your score may change after you open a new loan, but the impact depends on your overall credit profile and how you manage the loan over time.
Checking your rate with Happen Bank won't affect your credit score.2
Once your loan is issued, making on-time payments can help build a positive payment history. Paying off credit card balances may also improve your credit utilization, which can have a positive impact on your score.
Is a personal loan or a balance transfer card better for paying off debt?
It depends on the balance size and how quickly you can pay it down. A balance transfer card can offer a lower rate upfront—sometimes 0% intro APR—but that rate expires. Once the promotional period ends, any unpaid balance will move to the standard APR. A personal loan carries the same fixed rate for the full term. For larger balances or longer timelines, that predictability usually helps.
Related terms
Disclosures
The APR discounted rate is a discount that some customers may receive for taking out a loan to pay down existing qualifying debt paid directly by Happen Bank; such rate is discounted from the rate given for taking a full cash loan. Not all applicants will qualify for the discount. Any actual discount rate will be determined at the time of application. The best APR discounts may be available to borrowers with excellent credit. Advertised discounted rates are subject to change without notice.
Checking a rate through Happen Bank generates a soft inquiry on a person’s credit report, which does not impact that person’s credit score. A hard credit inquiry, which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person.
Between April 2026 and June 2026, 76% of Happen Personal Loans offers were generated in under a minute from the beginning of the application process.
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