Financial Wellness
Action Plan for Tackling High-Interest Debt
Maybe your goal this year is to buy a new car, purchase your first home, or max out your retirement contributions. You may want to travel, or to just save more, so you stress less over money.
Before you can begin to work toward any of these milestones, we must first address the elephant in the room: debt.
Key takeaways:
Debt reduction is priority #1. Paying off debt is the top financial resolution for most people this year, with 25% saying they are making debt payoff their number one goal.
Saving for travel is another priority. Over 30% plan to set aside money for vacations and travel this year.
Credit card debt is the biggest repayment target. Among those planning to pay down debt, more than 37% are prioritizing credit card debt over other types of debt.
2026 money resolutions by generation:
Gen Z is saving for large financial milestones (23%) and investing early (11%).
Millennials are tackling debt first (26%) and saving for major purchases (10%).
Gen X is focused on retirement savings (14%) while chipping away at debt (28%).
Baby boomers are focused on retirement (18%) and eliminating debt (24%).
Among those saving for a major purchase, vacations and getaways were the most common target. That's followed by goals like a new vehicle, home improvements, and a down payment on a home.
This popular, psychology-driven strategy focuses on paying off your smallest balances first. By eliminating small debts quickly, you build momentum, gain confidence, and create habits that make it easier to stick to a long-term plan.
How it works
The "snowball" refers to the increasing amount of cash available to pay off debt as each smaller balance is eliminated. To get started:
List debts by balance. Order all debts (excluding mortgage) from smallest to largest.
Make minimum payments. Continue making minimum required payments on all debts.
Target the smallest. Put all extra available cash toward the smallest balance.
Roll over payments. When the smallest debt is paid off, take the entire amount you were paying on it (minimum + extra) and add it to the minimum payment of the next smallest debt.
Repeat. Repeat this process. Your payment amount "snowballs" as it gets larger with each debt cleared.
Even better, consider a 0% APR balance transfer to pay off debt faster and cheaper. Just be sure to pay the balance off by the time the promotional period ends.
Another advantage of balance transfers is that you can consolidate your credit card debt into one monthly payment. That means only one due date to remember, and less chance you'll miss a payment or make a late payment.
Read the fine print
Be aware that companies usually charge a balance transfer fee, typically a percentage of the transfer amount. The industry average is 5%. The savings on interest usually outweighs the fee, but it's important to do the math.
Also be sure you know when any special rates or promotional periods expire. For balance transfers, be sure to pay off your balance within the promotional period and know what the regular card interest rate will be afterward.
And, if traveling more is on your 2026 bucket list, consider a low-rate travel rewards card with no annual fee and cash back option. Used strategically, your everyday spending could rack up points to cover flights, hotels, and more.
Before you can begin to work toward any of these milestones, we must first address the elephant in the room: debt.
Can you relate?
A recent survey revealed how Americans are hoping to improve their finances in 2026. Maybe you see yourself in some of the responses.Key takeaways:
Debt reduction is priority #1. Paying off debt is the top financial resolution for most people this year, with 25% saying they are making debt payoff their number one goal.
Saving for travel is another priority. Over 30% plan to set aside money for vacations and travel this year.
Credit card debt is the biggest repayment target. Among those planning to pay down debt, more than 37% are prioritizing credit card debt over other types of debt.
2026 money resolutions by generation:
Gen Z is saving for large financial milestones (23%) and investing early (11%).
Millennials are tackling debt first (26%) and saving for major purchases (10%).
Gen X is focused on retirement savings (14%) while chipping away at debt (28%).
Baby boomers are focused on retirement (18%) and eliminating debt (24%).
Among those saving for a major purchase, vacations and getaways were the most common target. That's followed by goals like a new vehicle, home improvements, and a down payment on a home.
The snowball method for reducing debt
For many of us, high-interest debt is our biggest hurdle to saving. One way to whittle away debt is known as the "debt snowball method."This popular, psychology-driven strategy focuses on paying off your smallest balances first. By eliminating small debts quickly, you build momentum, gain confidence, and create habits that make it easier to stick to a long-term plan.
How it works
The "snowball" refers to the increasing amount of cash available to pay off debt as each smaller balance is eliminated. To get started:
List debts by balance. Order all debts (excluding mortgage) from smallest to largest.
Make minimum payments. Continue making minimum required payments on all debts.
Target the smallest. Put all extra available cash toward the smallest balance.
Roll over payments. When the smallest debt is paid off, take the entire amount you were paying on it (minimum + extra) and add it to the minimum payment of the next smallest debt.
Repeat. Repeat this process. Your payment amount "snowballs" as it gets larger with each debt cleared.
Transfer balances and save
If a large part of your debt is driven by high-interest credit card balances, a good way to get ahead of this is with a balance transfer. This lets you move existing high-interest balances to a new card with a lower APR, so you can pay off the principal without piling on more interest.Even better, consider a 0% APR balance transfer to pay off debt faster and cheaper. Just be sure to pay the balance off by the time the promotional period ends.
Another advantage of balance transfers is that you can consolidate your credit card debt into one monthly payment. That means only one due date to remember, and less chance you'll miss a payment or make a late payment.
Read the fine print
Be aware that companies usually charge a balance transfer fee, typically a percentage of the transfer amount. The industry average is 5%. The savings on interest usually outweighs the fee, but it's important to do the math.
Also be sure you know when any special rates or promotional periods expire. For balance transfers, be sure to pay off your balance within the promotional period and know what the regular card interest rate will be afterward.
Beyond balance transfers
It's a smart strategy to find a credit card with a low APR year-round, so when the balance transfer promotional period ends you still end up paying less in interest.And, if traveling more is on your 2026 bucket list, consider a low-rate travel rewards card with no annual fee and cash back option. Used strategically, your everyday spending could rack up points to cover flights, hotels, and more.
Resources: Credit Karma, Forbes, Motley Fool Money
