Prolonged debt can ruin your financial plans and put you under stress. It is necessary to quickly find a suitable method to pay off your debt as soon as possible. If you have a lot of online loans and cannot pay them all at once, you may refer to the following 03 online loan repayment methods. Two of them are recommended by the Consumer Financial Protection Bureau (CFPB).

1. “Snowball” method 

Snowball method is one of two repayment methods recommended by the Consumer Financial Protection Bureau (CFPB).

This approach focuses on your smallest debt. The goal is to get the payment done as soon as possible. You continue to make the minimum payments on all your debts, and you set aside any extra money to pay off your smallest debt. Once you have paid off the smallest debt, continue to spend money paying for the next smallest amount. By this way, you create a payment “snowball” as you eliminate each debt. You will see rapid progress as you pay off smaller debts.

Snowball method can help you get rid of some online loans faster. It is important to note, however, that paying off small debt first means forgoing large debt with a higher interest rate. In the long run, those big debts will cost you more money.

“Snowball” method focuses on the smallest debt

 There are several advantages of this method, including:

However, there are disadvantages about this method that you have to consider, such as:

2. “Avalanche” method

The highest interest rate method, also known as avalanche method, is another basic debt settlement strategy recommended by the Consumer Financial Protection Bureau (CFPB).

Thanks to this avalanche method, you continue to make the minimum payments on your debts, but in contrast to the “snowball” method, you focus on paying off the balance with a high interest rate as quickly as possible. Subsequently, you move on to the balance with the next highest interest rate. In other words, you create an avalanche as you pay off your online loan debts.

Payment progress can be slow with the avalanche method because you may not be able to pay off your personal debts as quickly as you would with snowball method. However, avalanche method can save you money in the long run because you will soon pay off your most expensive debts.

Avalanche method focuses on paying off the balance with the highest interest rate as quickly as possible


Some good reasons to use the avalanche method include:

However, there are two potential downsides to use avalanche method:

3. “Snowflake” method

Snowflake method is quite similar to its name. A single snowflake may not mean, but when combined, many snowflakes will make a significant impact. In a similar way, the online borrowers who sign up for the snowflake strategy will put whatever small savings they have on a daily basis into a repayment plan. Ultimately, in theory, the accumulation of these small payments should lead to a complete repayment of the debt.

Snowflake strategy will put any small savings they get on a daily basis into a repayment plan


Some advantages of this debt management approach include:

However, this method also has disadvantages

Many financial experts consider snowflake method to be a great addition to snowball or avalanche strategies. However, as a standalone technique, it is often not considered the best way to pay off online loans.

However, each of the mentioned methods has its own advantages and disadvantages. In the end, the best way to manage and pay off debt depends on the borrower’s decision.

MoneyCat has an automatic reminder system to help you keep a close eye on your online loans. You do not need to worry about missing the payment of any even the smallest loan. When you have difficulty with payments due, you may contact MoneyCat for advice on the right solution. As an online lending institution with a strong operating structure in the Philippines, Russia, and Vietnam, MoneyCat is the first choice of people when they need online loans or any other financial need.