Best Way to Pay Off Debt in 2026

Every year, the debt landscape shifts. Interest rates change, new tools emerge, old apps shut down, and the strategies that made sense last year might not be optimal today. This is our annual look at the best ways to tackle debt right now, based on where things stand in early 2026.

What’s Different in 2026

Interest Rates Are Still Elevated

If you’ve been waiting for rates to drop back to 2021 levels before making a move, stop waiting. Credit card APRs are still averaging over 20%, and while the Fed has signaled some easing, the era of cheap credit hasn’t returned. This means two things for your debt payoff strategy:

1. High-interest debt is costing you more every month you wait. Every month of delay on a $10,000 credit card balance at 24% APR costs you roughly $200 in interest alone. The math hasn’t gotten better since last year.

2. Consolidation economics are tighter. Personal loan rates are in the 8-15% range for good credit, which still beats credit card rates but leaves less room for error than the 5-7% consolidation loans that were available a few years ago.

The App Landscape Has Thinned

2024 was rough for fintech. Tally shut down after raising $172 million. Mint was killed by Intuit and users were pushed to Credit Karma. Several smaller debt apps quietly disappeared. The upside: the apps that survived are generally more stable and sustainable. The era of venture-funded apps that hemorrhaged money to acquire users is winding down.

BNPL Debt Is Now a Real Category

Buy Now, Pay Later balances have grown to the point where they’re a meaningful part of many people’s debt picture. If you have Affirm, Klarna, or Afterpay balances alongside credit cards and loans, you need a payoff strategy that accounts for promotional deadlines and deferred interest — not all apps handle this well.

The Strategies That Work

1. Pick a Method: Snowball, Avalanche, or Hybrid

This hasn’t changed, and it won’t. The two core debt payoff strategies remain:

• Avalanche: Pay minimums on everything, throw extra money at the highest-interest debt first. Saves the most money mathematically.
• Snowball: Pay minimums on everything, throw extra money at the smallest balance first. Generates quick wins that keep you motivated.

In 2026, with rates as high as they are, the avalanche method saves more money than usual compared to snowball. On a typical debt mix, the difference can be hundreds or thousands of dollars. But if you’ve tried avalanche before and abandoned it because that first high-balance debt felt like it would never go down, snowball is still the better choice. A strategy you follow beats a strategy that’s mathematically optimal on paper.

The hybrid approach is gaining traction: start with snowball to knock out a few small debts and build momentum, then switch to avalanche once you’re in a groove. Some apps like Ascent support this kind of dynamic strategy switching without making you re-enter all your debts.

2. Use an App (But Choose Carefully)

Given the app shutdowns of the past two years, choose a debt payoff tool based on sustainability, not just features. Here’s what to look for:

• Clear business model. If an app is free with no obvious revenue source, it’s either selling your data or running on borrowed time. Apps with reasonable subscription fees or one-time purchases tend to stick around longer.
• Manual entry option. Apps that require bank linking create a dependency on third-party data aggregators (like Plaid), which can break and incur costs. Apps with solid manual entry put you in control. See our manual vs bank-linked comparison for a deeper look.
• Data portability. Can you export your data? If the app disappears tomorrow, can you recover your information? CSV or PDF export should be a baseline feature.

Our current top picks for debt payoff tracking:

• Ascent — Best for couples and strategy variety (iOS, one-time purchase)
• Debt Payoff Planner — Best for simplicity (iOS and Android, freemium)
• Undebt.it — Best free web option (browser-based)

3. Attack High-Interest Debt Aggressively

With credit card rates above 20%, every dollar of extra payment you can direct toward high-interest debt has an outsized impact. Some specific moves worth considering in 2026:

Tax refund allocation. If you’re getting a tax refund, applying it as a lump-sum payment to your highest-interest debt is one of the most impactful single actions you can take. A $3,000 refund applied to a 24% APR credit card saves you $720 in interest over the next year.

Subscription audit. This isn’t a new idea, but it’s worth revisiting annually. Cancel what you don’t use, downgrade what you can, and redirect the savings to debt. Even $50/month extra toward your highest-rate debt accelerates your timeline significantly.

Snowflake payments. Small, irregular extra payments — money from selling something, a side gig payment, a cashback reward — applied directly to debt. Individually small, collectively meaningful. Some apps track these automatically.

4. Consider Consolidation (If the Math Works)

Consolidation — through a personal loan, balance transfer, or debt management plan — can still make sense in 2026 if:

• Your consolidation rate is meaningfully lower than your current rates (not just 2-3% lower — enough to justify fees)
• You won’t run the credit cards back up after paying them off
• You’ve done the total-cost calculation including all fees

Balance transfers at 0% are still available for people with good credit, but the promo windows have shortened slightly (15-18 months is now more common than 18-21). Make sure you can realistically pay the balance in full before the rate jumps.

5. Don’t Ignore the Income Side

Most debt payoff advice focuses exclusively on payment strategies and budgeting. But the fastest way to accelerate debt payoff is to increase your income. A $500/month side gig dedicated entirely to debt payoff cuts years off a typical timeline.

This isn’t a “just make more money” platitude. The gig economy, remote freelancing, and marketplace selling have made it more accessible than ever to generate supplemental income. Even temporary increases — a few months of weekend work — can make a dramatic difference when applied directly to debt.

What to Skip in 2026

Debt Settlement Companies

Companies that promise to settle your debt for “pennies on the dollar” are still out there, and they’re still mostly bad news. They typically tell you to stop paying your creditors and save money in a separate account, then attempt to negotiate lump-sum settlements. Meanwhile, your credit gets destroyed, late fees and interest pile up, and you might get sued. The success rates are poor, and the fees are high. If you’re considering this path, talk to a nonprofit credit counselor first — it’s free, and they’ll give you an honest assessment of your options.

Crypto or Investment-Based Payoff Schemes

“Invest your money instead of paying off debt because the market returns more than your interest rate” — this advice circulates constantly online and is almost always wrong for credit card debt. At 20%+ APR, no reliable investment consistently outperforms your interest cost on a risk-adjusted basis. Pay off the high-interest debt. Invest after.

Waiting for Rate Cuts

Even if the Fed cuts rates further in 2026, credit card rates are slow to follow. The spread between the federal funds rate and consumer credit card APRs has widened over the past decade and shows no sign of reverting. Don’t base your plan on future rate relief that may not materialize for your specific debts.

The Actual Best Way

Here’s the unglamorous truth: the best way to pay off debt in 2026 is the same as it’s always been.

1. Write down every debt you have — balance, rate, minimum payment
2. Pick a strategy (avalanche saves more, snowball motivates more)
3. Find extra money — even $50-100/month makes a real difference
4. Track your progress with a tool you’ll actually use
5. Make consistent payments every single month

No app, strategy, or consolidation product replaces this core loop. The tools exist to make each step easier and more visible, but the process is fundamentally about consistency. The people who successfully pay off debt aren’t the ones who found the perfect app or the optimal strategy — they’re the ones who made payments every month for as long as it took.

Start today. Use our calculator to see your timeline. Pick a tool from our beginner’s guide if you need one. And check back here next year — we’ll update this guide with whatever has changed.