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    What Is Debt Stacking?

    Anyone who has let debt build-up knows just how difficult it can be to pay it off. While paying the minimum payment is enough to avoid missed payment on one’s credit report, it can take years, in some cases decades, to pay off debt this way.

    Debt stacking, otherwise known as the debt avalanche method, is one of the most popular debt reduction strategies. 

    Keep reading to see exactly what debt stacking is and how to properly implement this strategy.

    How Debt Stacking Works

    The general premise of this strategy involves targeting the debt with the highest interest rate first while making the minimum payments on all other debts. This is an aggressive debt reduction strategy with several advantages.

    When one focuses on eliminating the highest interest carrying debt first, it results in the individual paying significantly less over the long run when compared with other debt reduction methods.

    It’s also the best use of one’s economic resources as it’ll ensure less money goes to paying interest and more goes towards attacking the principal amount.

    A Debt Stacking Example

    Imagine someone who’s decided to use debt stacking as a means of getting out of debt. They must first take stock of their debts, ordering them by interest rate and amount.

    For example, consider the following list of debt.

    • Visa Card: $1,200 at 18.99% interest
    • Car Loan:  $5,000 at 12.99% interest
    • Line Of Credit: $3,000 at 5.99% interest

    Using the debt stacking method, the individual would pay off their visa card first, followed by their car loan, and finally their line of credit. This will be the fastest, and least expensive, route to paying off their debt.

    How To Build An Effective Stacking Strategy

    Building an effective stacking strategy is simple. It requires the individual to list all debts, excluding mortgages, and rank them starting with the debt with the highest interest rate and highest amount.

    The objective here is to attack the most expensive loan first, working one’s way down the list.

    Another crucial part of formulating an effective debt reduction strategy is to determine how much you’re able to put towards paying off debt each month.

    Remember, the minimum payment on all other debts still need to be met while the most expensive debt is being paid off.

    What Is The Difference Between Stacking And The Snowball Method?

    Along with the stacking method, the snowball method is a very popular debt reduction strategy. This strategy takes the opposite approach and focuses on paying off the smallest debt first.

    • Psychological Vs Economic Reasoning: One of the most difficult aspects of paying off debt is staying committed to the process. Debt stacking can at times seem discouraging to people because, although it’s the best option, in the long run, it may take a while to see progress. Since the debt snowball method focuses on the smallest debt first it’s psychologically comforting as people can see their progress in milestones.
    • Difference In Long Term Costs: The debt snowball method chooses the smallest debt first because of the psychological boost it delivers. Due to this, it’s very likely to cost significantly more in the long run than stacking.

    Debt Stacking Pros & Cons


    • Lower Overall Cost: The debt with the highest interest rate will cost the most. By eliminating this debt, a borrower stands to save more money and reach zero-debt faster.
    • Fastest Route To Debt Elimination: This is the most aggressive debt reduction strategy because of the way it attacks the highest interest debts first. This results in a faster road to debt freedom.
    • Most Efficient Use Of Economic Resources: Other debt reduction strategies, such as the snowball method, don’t target the highest interest debts first. Because of this, more interest is paid in the long run. Stacking ensures the individual gets the best value for each payment.


    • Less Rewarding In The Short Term: People are easily discouraged if they don't see any progress. The lack of visible progress in the beginning stages of stacking may make it harder to stay motivated and disciplined.
    • Higher Failure Rate: Because it’s harder to maintain, stacking is abandoned at a higher rate than the debt snowball method. 


    Those who are able to maintain the necessary commitment required to undergo debt stacking will experience the quickest and least expensive route to debt freedom. While other methods may be psychologically more appealing, stacking is by far the most preferred method because of the way it attacks the most expensive debt first.