Different ways to zap your debt

It makes sense to pay particular attention to your credit cards, because their interest rates are typically higher than other types of debt, like student loans or a mortgage. Carrying balances on this more costly debt may derail goals such as building a retirement fund.

If your other types of debt are manageable, but your credit cards feel out of hand, you need to assess your situation first. Then you can choose a way to handle that debt, whether it's a self-guided payoff strategy or some type of debt relief, perhaps even bankruptcy.

First, take stock by:

- Making a list of all your credit card balances. Note the interest rate and minimum payment for each.

- Comparing that debt to your income. Add up your total credit card debt and divide it by your annual income. For example, if you owe $5,000 on your cards and make $50,000 a year, your credit card debt is 10 per cent of your income.

- Determining what you can pay monthly. See if you can pay extra on top of your minimums.

The path you pick from here depends on your debt level and whether you can pay more than the minimums.

If your credit card debt is under 15 per cent of your income and you can pay more than the minimums, take a do-it-yourself approach.

Two common methods are "debt avalanche" and "debt snowball." Here's how they work.

Avalanche: Arrange debts by interest rate and pay off in order from highest to lowest. Keeping your focus on the most-expensive debt saves money on interest.

Snowball: Arrange debts by balance and pay them off from smallest to largest. This can give you some quick victories to build momentum towards tackling bigger debts later.

With either method, pour all your extra payment money into the debt you're focusing on and pay the minimums required on the others.

After wiping out the first debt, stack what you had been paying towards it on top of the minimum for debt No. 2 and keep going. You'll end up ploughing an ever-larger payment towards your targeted debt, speeding up progress.

Debt relief getting a lower interest rate or a reduction in what you owe can make bigger debt loads more manageable. You may need it if you're having difficulty paying the minimums or your credit card debt has exceeded 15 per cent of your income.

One option is debt consolidation, where several debts are rolled into one at a lower interest rate, often by getting a personal loan or using a balance transfer credit card.

AP/NerdWallet