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Why it’s important

You can reduce your total debt faster and pay less on interest and fees by using a pay-down strategy.

It’s helpful to make a list of all your debt amounts and interest rates. You’ll get the most financial reward by paying down your highest-interest-rate debt first, such as credit cards. That’s because the higher the interest rate, the more money you’re charged in borrowing fees.

By targeting this debt, and paying it off in full first, you’ll reduce the total amount you owe faster. You’ll also free up money to put toward savings, or paying down your next debt. Use this approach to pay down accounts with the highest interest rates, one by one, while still making regular payments on the rest — more than the minimum amount if you are able.

One Little ThingSM you can do: Simple steps for managing debt

While repaying your debt can often feel challenging, creating a plan to manage your payments and balances can help. Here are 3 small steps you can take today to make managing your debt easier.

1. Pay more than the minimum. Pay off your debt and save significantly on interest over time by paying more than the minimum every month. For example, if you have a $10,000 loan with a 7% annual percentage rate, and you paid $198 a month, you’d be able to pay off your debt in 5 years. But if you were to increase your payment by just $40 a month, you could pay off your debt in 4 years, save $376 in interest payments, and be debt-free a year earlier.

2. Make a payment every 2 weeks. If you pay half of your monthly bill every 2 weeks instead of the full amount once a month, you’ll make one extra full payment over the course of a year — and you could pay your debt off faster. Ask your lender if these partial payments can be applied to your principal.

3. Set up automatic payments. Stay on top of your debt by setting up automatic transfers — it’s easy to do and will help reduce your debt in no time.

  • If you already have a Wells Fargo checking or credit account, simply sign on to Wells Fargo Online Bill Pay to set up automatic transfer.
  • If you don’t already bank with Wells Fargo, check out how with a Wells Fargo Online account, you can help ensure you pay your bills on time, every time using Wells Fargo Online Bill Pay.


Trying to eliminate all of your debt? Don’t close all of your accounts. Keeping at least one credit account open and paying the balance every month, may help you maintain or increase your credit score.
Check out all 8 Rules of Thumb to Financial Health. See more

Helpful reading

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