American household debt is at record levels — student loans, auto loans, credit card balances, and mortgages collectively represent trillions in obligations. This guide gives you the framework to approach your specific debt situation with clarity.
The order of priority: not all debt is equal
| Debt type | Typical APR | Priority |
|---|---|---|
| Credit card (average) | 21-27% | Highest — attack immediately |
| Personal loan | 10-20% | High |
| Auto loan | 5-12% | Medium |
| Private student loans | 5-14% | Medium |
| Federal student loans | 4-8% | Lower — flexible repayment options exist |
| Mortgage | 4-7% | Lowest — investing may beat this rate |
Avalanche vs Snowball: which wins?
- Avalanche (highest interest first): Mathematically optimal — saves the most money in total interest. Best for people who are motivated by numbers and can sustain momentum.
- Snowball (smallest balance first): Psychologically powerful — wins create momentum. Costs more in total interest but has higher completion rates in studies. Best for people who need quick wins to stay engaged.
💳 Credit Card Debt Cost Calculator
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