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If you’re exploring career options, pharmacy might have popped up on your radar — and for good reason. Not only can pharmacists command a good salary, they also have job security, as the pharmaceutical industry is one that won’t vanish any time soon.

That said, how much does a pharmacist make? Is it worth all the trouble of going through pharmacy school to become one? Let’s find out.

What Are Pharmacists?

You’ve likely picked up a prescription or two at a pharmacy, but maybe you didn’t give any thought to the person behind the counter. This individual is your local pharmacist, and it’s their job to prepare and dispense prescription medications.

Pharmacist Job Responsibility Examples

In addition to doling out prescription drugs, pharmacists also consult with patients, provide instructions for how to take medications, and help patients find low-cost medications. Some also give health screenings and immunizations.

Keep in mind, a pharmacist often needs to be outgoing, since their work involves speaking with patients throughout the day. If that’s not your personality, you may want to look into jobs for introverts.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

How Much Is a Starting Pharmacist Salary?

As with most professions, pharmacists tend to earn more money as they gain more experience. But what is a good entry-level salary for pharmacists?

An entry-level pharmacist generally earns, on average, about $61 per hour. That’s $126,701 per year.

Of course, how much you can actually earn depends on where you live, what your duties are, and whether you work for an independent pharmacy or a chain. It can also help to research the highest-paying jobs by state.

Recommended: Is a $100,000 Salary Good?

What Is the Average Salary for a Pharmacist?

Now that you’ve seen what starting salaries are for pharmacists, let’s address the next question: How much money does a more experienced pharmacist make?

Generally speaking, pharmacists are usually paid by the hour. As of 2024, the mean wage for a pharmacist in the US is $65.97 per hour, according to the Bureau of Labor Statistics. That adds up to $137,210 per year.

What Is the Average Pharmacist Salary by State for 2024?

The amount you make will depend on where you live, among other factors. Here’s a look at the mean annual pharmacist salaries by state, according to May 2024 data from the Bureau of Labor Statistics.

State	Salary
Alabama	$129,100
Alaska	$158,430
Arizona	$136,410
Arkansas	$132,090
California	$162,110
Colorado	$145,690
Connecticut	$134,610
Delaware	$138,860
District of Columbia	$136,920
Florida	$129,460
Georgia	$130,430
Guam	$118,170
Hawaii	$147,650
Idaho	$132,460
Illinois	$136,050
Indiana	$133,700
Iowa	$131,150
Kansas	$130,770
Kentucky	$130,990
Louisiana	$125,450
Maine	$136,010
Maryland	$136,210
Massachusetts	$133,640
Michigan	$129,620
Minnesota	$147,880
Mississippi	$127,530
Missouri	$136,170
Montana	$135,130
Nebraska	$127,300
Nevada	$133,320
New Hampshire	$140,440
New Jersey	$134,360
New Mexico	$135,670
New York	$136,020
North Carolina	$134,030
North Dakota	$125,790
Ohio	$127,400
Oklahoma	$127,050
Oregon	$156,160
Pennsylvania	$133,720
Puerto Rico	$98,290
Rhode Island	$120,170
South Carolina	$135,720
South Dakota	$137,460
Tennessee	$125,850
Texas	$134,880
Utah	$131,280
Vermont	$135,880
Virgin Islands	$126,140
Virginia	$137,920
Washington	$154,860
West Virginia	$125,530
Wisconsin	$141,090
Wyoming	$138,330

Recommended: Pros and Cons of Raising the Minimum Wage

Pharmacist Job Considerations for Pay & Benefits

Where you live is one factor that can determine how much you earn as a pharmacist. Your on-the-job responsibilities may also play a role. For example, there are different job titles, and each has its own set of responsibilities, requirements, and salary ranges. Examples include:

•  Staff pharmacist

•  Pharmacy specialist

•  Clinical pharmacist

•  Pharmacy manager

•  Director of pharmacy

Some pharmacists may have roles and responsibilities beyond filling prescriptions, such as offering immunizations and health screenings. Some may be in charge of hiring and managing other employees. Some may work in traditional pharmacies, while others may work for companies focusing on chemotherapy, nuclear pharmacy, or long-term care.

Recommended: 25 High-Paying Trade Jobs in Demand

Pros and Cons of Pharmacist Salary

While being a pharmacist can be a rewarding job, there are potential drawbacks to keep in mind. Let’s look at some pros and cons.

Pros of Being a Pharmacist

Naturally, the competitive pay pharmacists often earn may be one reason to consider this career path. Because many pharmacists get paid by the hour, they’ll be compensated fairly for their time even if they work more than 40 hours a week.

Another perk is that you may have a flexible schedule that allows you to work part-time or during certain hours. There could even be opportunities to work remotely, which may be useful if you’re working in a rural area.

You might also be able to open your own pharmacy instead of working for someone else. This brings freedom and flexibility to you as a business owner.

Finally, you’ll be a valuable member of your community, since it’s your job to help people on their path to wellness.

Cons of Becoming a Pharmacist

If becoming a pharmacist was easy, everyone would do it! For starters, you’ll need to have about six years of education after high school. And the cost of pharmacy school can range anywhere from $34,000 to $43,000 a year for an in-state public college, or up to $92,000 a year for a private school.

Depending on your financial situation, this could require you to tap into savings or take out student loans. (Creating a budget while you’re in school or just starting out can help you keep track of where your money is going. A money tracker app can help make the job easier.)

Another possible drawback? Some pharmacies may not guarantee a certain number of hours a week, and in that case, being paid hourly may not come with the big paycheck you’d expect.

Also keep in mind that on the other hand, some pharmacists work long hours, which can have a negative impact on your health and mental wellbeing.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

If you’re looking for a rewarding and potentially lucrative job, becoming a pharmacist might fit the bill. You’ll help your local community get healthier, and depending on where you live and your level of experience, you could earn a good salary, too.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What is the highest pharmacist salary?

The state where pharmacists tend to earn the most is California. The mean annual income of a pharmacist there is $162,110.

Is it hard to be hired as a pharmacist?

Becoming a pharmacist requires six years of education after high school. The workload is challenging, and pharmacies looking to hire generally have high expectations of applicants.

What is a pharmacist’s salary in NY?

The mean annual salary for a pharmacist in New York is $136,020, according to the Bureau of Labor Statistics. However, salaries can vary considerably by region, experience, and level of responsibility.

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Photo credit: iStock/ADragan

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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The value of a car depends on many factors, from the make and model to age, condition, and mileage. How quickly you want to sell and where you live can also play a big part in how much money you get for your car.

It’s important to understand these factors as you appraise your vehicle. Here’s a closer look at resources you can consult as you determine how much your car is worth.

What Is a Good Price for My Used Car?

In Q2 2025, the average used car price hovered around $31,000. Whether you’re able to sell your car for above or below that price will depend on many factors. First of all, mileage has a big impact on price. The more you’ve driven your car, the less it will be worth.

A car’s condition is also important. Are there repairs that have to be made or parts that need replacing? Does the car have an accident history? If so, the value of the car may be negatively impacted.

The older a car is, the more wear and tear it’s likely to have experienced. As a result, older cars usually cost less than newer counterparts.

Some factors that can impact car price are more surprising, such as where you live and how quickly you need to sell it. The weather in your area can take its toll on your vehicle. Harsh New England winters and salted roads, for example, can cause metal components to rust. Sunny climes have their own issues, too; too much sun can cause paint and other finishes to lose their luster.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

Understanding the Different Estimated Values

There are a few different ways to calculate estimated car value. Here’s a look the most common terms:

Market Value

The market value of a used car is a reflection of how much buyers are usually willing to pay for a given vehicle. It will depend on factors such as location, make and model, mileage, and condition. See below for resources to determine market value.

Recommended: How to Save Up for a Car

Trade-In Value

Trade-in value comes into play when you’re considering buying a used car or a new vehicle. It’s the amount of money a dealer is willing to give you for your old car that you can then put toward the purchase price of another vehicle.

The trade-in value is often lower than top market value. That’s because the dealer needs to turn a profit when they resell the vehicle.

If you’re trading in your car for a new or new-to-you model, your credit score will impact the interest rate you receive on your auto loan. There is generally no baseline credit score required to qualify for auto financing, but lower scores will pay significantly higher interest rates.

Recommended: What Credit Score Is Needed to Buy a Car?

Private Party Value

You may encounter the phrase “private party value” as you research how much your car is worth. This usually means the fair market value when selling your vehicle to an individual rather than a dealership.

Instant Trade-In Dealer Quotes

Brick-and-mortar dealerships and websites, such as Kelley Blue Book, Vroom, TrueCar, and Carvana, may offer instant cash or instant dealer trade-in quotes.

The process is similar to looking up the value of your vehicle online. You often need to share only a few details about your car, such as the vehicle identification number (VIN) or your license plate number, and the company will come back to you with an offer of cash for your car.

Once you receive an offer, there will likely be an in-person follow-up to review your vehicle before you receive any money.

Common Car Value Estimate Resources

There are a variety of resources available where you can research car prices and estimate the value of your vehicle.

Kelley Blue Book

Kelley Blue Book, or KBB, is an online resource for finding the value of new and used vehicles. It dates back to the 1920s, when the company published an actual blue book dealers would look at to establish pricing information and car values.

To research your car’s value, you can provide your vehicle identification number (VIN), license plate number, or year, make, model, mileage, and zip code. You can also input the equipment that is included on your vehicle and the color of your car to further narrow down the value.

Black Book

Similar to KBB, Black Book offers VIN-specific valuations. However, it also integrates vehicle history report data from Autocheck, such as reported damage to the vehicle. The company then offers an adjusted valuation based on this information.

National Automobile Dealers Association

The National Automobile Dealers Association (NADA) provides resources for shoppers looking for new and used vehicles. Use the website to compare prices on similar vehicles to your own to help determine what the going market rates are. The company also provides shopping guides that can help you learn more about the car buying and selling process, and glean tips for what buyers are looking for in a used vehicle.

Edmunds

Edmunds offers a car appraisal tool that also allows you to search vehicle values by VIN, license plate number, and year, make, and model. The California-based company was founded in 1966 “for the purpose of publishing new and used automotive pricing guides to assist automobile buyers.”

Who Gives the Most Accurate Car Value Estimate?

Kelley Blue Book and Edmunds are two of the most widely used and trusted general reference sites when it comes to valuations of particular makes and models of used cars and trucks.

Each site may show different values for the same vehicle, but no site consistently provides higher or lower estimates than the other.

Car Brands With the Highest Resale Value

The brand of a car, also known as its make, can have a big impact on resale value. Some makes are more popular than others, often due to a reputation for safety, fuel economy, or durability.

According to research by iSeeCars, the following 10 cars had the lowest depreciation in 2025.

	Make and Model	Average 5-Year Depreciation
1.	Porsche 911	19.5%
2.	Porsche 718 Cayman	21.8%
3.	Toyota Tacoma	26.0%
4.	Chevrolet Corvette	27.2%
5.	Honda Civic	28.0%
6.	Chevrolet Camaro	28.0%
7.	Toyota Tundra	29.1%
8.	Ford Mustang	29.2%
9.	Porsche 718 Boxster	29.6%
10.	Toyota Corolla Hatchback	30.1%

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Importance of Add-On Options

Pricey add-ons, such as splash guards, alarm systems, and tinted windows, don’t always add value to used cars. In fact, once a car is two or three years old, they may have little effect on value at all.

Recommended: Trading in a Car in 5 Easy Steps

The Takeaway

The value of your car will change from year to year as it ages, and supply and demand shift. Staying on top of your car’s value can help you make informed decisions about your net worth, as well as decisions about when to sell or trade in your vehicle for a new car.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do you estimate the value of a car?

You can estimate a car’s value by considering its make, model, year, condition, and mileage. Use online tools like Kelley Blue Book and Edmunds, check recent sales of similar vehicles in your area, and factor in local market conditions.

How do I find the fair market value of my car?

To find the fair market value of your car, use online tools like Kelley Blue Book and Edmunds, check recent sales of similar vehicles in your area, and consider factors such as make, model, year, condition, and mileage.

What is the difference between market value and fair market value?

Fair market value is an estimate of what a potential pool of buyers might pay, while the market value is what they are actually willing to pay.

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Photo credit: iStock/DjordjeDjurdjevic

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q425-004

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If you’re thinking of taking a road trip, using a gas trip cost calculator can help you determine how much you are likely to spend filling up your tank. Then you can use that information to decide whether it’s more cost-effective to drive, take a train or bus, or fly.

Let’s look not only at a gasoline cost trip calculator table, but also why you should calculate how much you’ll spend on gas and how you can save money filling up at the pump.

Why Use a Gas Cost Trip Estimator

You may think nothing of filling up your gas tank every few weeks when you’re only driving to work and the store. But consider how much gas you’d use for a trip from, let’s say, San Diego to New York City. Understanding what it will cost you to fuel up for an entire trip can help you better budget your expenses.

Using a gas trip cost calculator can help you figure out how much of your entire trip budget will be dedicated to fueling up.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

How to Calculate Your Gas Cost Trip

To figure out how much gas will cost for a road trip, you can, of course, use a trip cost calculator. You’ll need to input basic details, like your type of car (different sizes and types of cars burn gas at different rates) and your route, and the calculator can estimate with real-time gas prices.

A simple method to calculate your gas cost is to look at your route and the total distance in miles, and divide this number by the number of miles per gallon your vehicle gets. (You can check your owner’s manual to find this out if you don’t already know.) This will tell you the number of gallons of gas you’ll need for the entire trip.

Now you’ll need to know the price of gas so you can multiply it times the number of gallons you need. Since gas prices by state may vary wildly, you might take an average of prices found in five places along the way. Tools like Gas Buddy let you search for gas prices in a given city, so you can use this for research.

Gas Cost Trip Calculator Table

Let’s use the process above to illustrate how you can be your own gas calculator for trip costs.

Distance from San Diego to NYC	2,760 miles
Miles per gallon	22
2,760/22	125 gallons
Average gas price: • San Diego: $4.71 • Albuquerque: $2.74 • Saint Louis: $2.65 • Indianapolis: $3.03 • Philadelphia: $3.18	Average: $3.26
125 gallons x $3.26	$407.50 gas budget

As you can see, it would cost about $407.50 for gas for the entire trip. Of course, this is based on an average cost of gas, and prices will fluctuate over time and in different towns and cities.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Examples of Gas Cost Trips

Let’s look at a few other examples of trips and how much they would cost in gas.

Distance from Los Angeles to Seattle	1,335 miles
Miles per gallon	22
1,335/22	61 gallons
Average gas price: • Los Angeles: $4.84 • Stockton: $4.46 • Sacramento: $4.59 • Medford: $4.00 • Portland: $4.20	Average: $4.42
61 gallons x $4.42	$270 gas budget
Phoenix to Dallas	1,067 miles
Miles per gallon	22
1.067/22	48.5
Average gas price: • Phoenix: $3.58 • Benson: $3.47 • Deming: $2.93 • Fort Stockton: $2.88 • Abilene: $2.68	Average: $3.12
48.5 gallons x $3.12	$151

Reasons to Calculate Your Gas Cost

So why should you bother using a road trip cost calculator? Well, most people don’t have unlimited funds when it comes to taking a road trip, so for starters, it can help you see how much you’d spend. You might decide it’s not worth driving if the cost exceeds what you’d pay for a flight, bus, or train ride.

Even if you’re not planning a big trip, looking at how much it costs to drive on a tank of gas can be helpful for maintaining your monthly budget. Once you understand how much you’re spending on gas, you might limit how often you drive to save money.

Speaking of saving money, here are five ways to save money on gas.

Tips on How to Save on Gas Money

Speaking of saving money, let’s look at how to save money on gas.

Plan Where You’ll Fuel Up

If you’re planning a road trip, use a tool that shows you exactly where the cheapest gas can be found. You might be able to save $.10 or more a gallon simply by planning ahead. There are even some trip fuel cost calculators that will help you plan where to stop based on gas prices.

Consider How You Pay

There are different types of credit cards that can help you save at the pump. Branded gas credit cards often offer rewards that will shave off a few cents per gallon or give you a bonus after you’ve charged a certain amount of purchases.

You might also consider a cash back credit card that gives you cash or credits for your purchases once you’ve hit a certain threshold.

Look into Alternative Transportation

You may be quick to rely on cars to get around, but there are often other overlooked methods of transportation to consider. Whether it’s a bus, train, Uber, or plane, you might be able to save money by leaving your car at home.

You can also cut your gas costs by splitting them with a friend.

Another way to stick to your travel budget? A money tracker app, which can help you keep tabs on where your money is going while you’re on the road.

Only Use Premium if Necessary

Most cars run just fine on regular unleaded gas, which can be significantly cheaper per gallon than premium versions, especially if you’re on a long trip. Check your car manufacturer’s recommendations to see if you can use regular unleaded gas.

Drive an Empty Car

The heavier your car is, the more gas it burns. So if you’ve been lugging around something heavy unnecessarily, consider leaving the load at home before you drive.

The Takeaway

Paying attention to how much gas costs, particularly for a road trip or long commute, is smart financial planning. Whether you use an online version or crunch the numbers on a piece of paper, a gas trip cost calculator can help you figure out how much you may want to budget for fill-ups.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do I calculate gas cost for a trip?

To calculate gas for a long road trip, divide the number of miles of the route by the miles per gallon your car gets. This is the number of gallons you’ll need to drive the distance. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

How much would 1 mile of gas cost?

Divide the cost per gallon by the number of miles per gallon your car will go. For example, if you pay $3.99 per gallon and your car gets 22 miles per gallon, driving one mile would cost about $.18.

How do you calculate fuel to destination?

To calculate how much fuel you’ll need to get to your destination, divide the number of miles of the remaining route by the miles per gallon your car gets. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

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Photo credit: iStock/georgeclerk

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Debt may seem like something you want to avoid. However, having some debt can actually be a good thing, provided you can comfortably afford to make your payments each month.

A good payment history shows lenders that you can be responsible with borrowed money, and it will make them feel better about lending to you when the time comes for you to make a big purchase, like a home.

But not all debt is created equal. Consumer debt can generally be broken down into two main categories: secured and unsecured. Those two categories can then be subdivided into installment and revolving debt. Each type of debt is structured differently and can affect your credit score in a different way.

Here are some helpful things to know about the different types of debt, plus how you may want to prioritize paying down various balances you may already have accumulated.

Secured vs Unsecured Debt

The first distinction between types of debt is whether it’s secured or unsecured. This indicates your level of liability in the event you fall behind on payments and go into default on the loan or credit card.

Secured Debt

Secured debt means you’ve offered some type of collateral or asset to the lender or creditor in exchange for the ability to borrow funds. There are many types of secured debt. Auto loans and mortgages are common examples.

The benefit is that you improve your odds for approval by offering collateral, and you may also receive a better interest rate compared to unsecured debt. But if you go into default on the loan, the lender is typically allowed to seize the asset that’s securing the debt and sell it to offset the loan balance.

If that happens, not only is your property repossessed, your credit score can also be severely damaged. This could make it difficult to qualify for any type of financing in the near future.

A foreclosure, for instance, generally stays on your credit report for seven years, beginning with the first mortgage payment you skipped.

Unsecured Debt

Unsecured debt comes with much less personal risk than secured debt since you don’t have to use any property or assets as collateral.

Common types of unsecured debt include credit cards, student loans, some personal loans, and medical debt. Since you don’t have to put up any type of collateral, there may be stricter requirements in order to qualify. Your lender will likely check your credit score and potentially verify your income.

With unsecured debt, you are bound by a contractual agreement to repay the funds, and if there is a default, the lender can go to court to reclaim any money owed. However, doing so comes at a great cost to the lender. For this reason, unsecured debt generally comes with a higher interest rate than secured debt, which can pile up quickly if you’re not careful.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

Installment vs Revolving Debt

The difference between secured and unsecured debt is one way to classify financing options, but it’s not the only way.

Both secured and unsecured debt can be broken down further into two additional categories: installment debt and revolving debt.

Installment Debt

Installment debt is usually a type of loan that gives you a lump sum payment at the beginning of the agreement. You then pay it back over time, or in installments,before a certain date. Examples of this type of debt include a car loan, student loan, or mortgage.

Once you’ve paid the loan off, it’s gone, and you don’t get any more funds to spend. Examples of this type of debt include a car loan, student loan, or mortgage.

There are a number of ways an installment loan can be structured. In many cases, your regular payments are made each month, with money going towards both principal and interest.

Less frequently, an installment loan could be structured to only include interest payments throughout the term, then end with a large payment due at the end. This is called a balloon payment. Balloon payments are more frequently found with interest-only mortgages. Rather than actually making that large payment at the end of the loan term, borrowers typically refinance the loan to a more traditional mortgage.

Installment loans can have either a fixed or adjustable interest rate. If your loan has a fixed rate, your payments should stay the same over your entire term, as long as you pay your bill on time.

A loan with an adjustable rate will change based on the index rate it’s attached to. Your loan terms tell you how frequently your interest rate will adjust.

Provided you make your payments on time, having a mortgage, student loan, or auto loan can often help your credit scores because it shows you’re a responsible borrower. In addition, having some installment debt can help diversify your credit portfolio, which can also help your scores.

Revolving Debt

Unlike installment debt, revolving debt is an open line of credit. It gives you an amount of available credit that you can draw on and repay continually.

Both credit cards and lines of credit are common examples of revolving credit. Instead of getting a lump sum at one time (as you would with installment debt), you only use what you need — and you only pay interest on the amount you’ve drawn.

Your available credit decreases as you borrow funds, but it’s replenished once you pay off your balance.

Revolving debt can be unsecured, as in the instance of a credit card, or it can be secured, such as on a home equity line of credit.

One downside of revolving credit is that there’s no fixed payment schedule. You typically only have to make minimum payments on your revolving credit, but your interest continues to accrue.

That can result in a much higher balance than the original purchases you made with the funds. And if you miss a payment, you’ll likely owe late fees on top of everything else.

Because it’s easier to get caught in a cycle of debt, having large revolving debt balances can hurt your credit score. A balance of both revolving and installment debt can give you a healthier credit mix, and potentially a better credit score.


💡 Quick Tip: Check your credit report at least once a year to ensure there are no errors that can damage your credit score.

Debt Payoff Strategies

Whatever kind of debt you carry, the key to avoiding a negative debt spiral — and maintaining good credit — is to pay installment debt (such as your student loan and mortgage) on time, and try to avoid carrying high balances on your revolving debt.

While everyone’s financial circumstances are different, here are some debt payoff strategies that can help you prioritize your payments.

Paying off the Highest Interest Debt First

If your primary goal is to save money over the life of your loans, you may want to start by paying off your highest interest rate loan first, while making just the minimum payments on everything else.

You can then move on to the next highest and next highest until your debts are paid off. This payoff approach is often referred to as the debt avalanche method.

Paying off the Debt with the Smallest Balance First

Paying down debt can feel neverending, so it can be nice to feel like you’re making progress. By focusing on your smallest debts first (and paying the minimum on everything else), you can cross individual loans off your balance sheet, while quickly eliminating monthly payments from your budget.

Once paid off, you can then reroute those payments to make extra payments on larger loans, an approach often referred to as the debt snowball method.

Considering Debt Consolidation

If you don’t see a clear strategy for paying off your debt, you might consider debt consolidation. This involves taking out a single personal loan to consolidate your other balances. If your credit score has increased, this may be a good way to decrease your overall interest rate. But at a minimum, this move can help streamline your payments.

Being Wary of Debt Settlement Companies

If you’re feeling overwhelmed by debt, you may look for a shortcut with a debt settlement company.

Debt settlement is a service typically offered by third-party companies that allows you to pay a lump sum that’s typically less than the amount you owe to resolve, or “settle,” your debt. These companies claim to reduce your debt by negotiating a settlement with your creditor.

Paying off a debt for less than you owe may sound great at first, but debt settlement can be risky.

For one reason, there is no guarantee that the debt settlement company will be able to successfully reach a settlement for all your debts. And you may be charged fees even if your whole debt isn’t settled.

Also, if you stop making payments on a debt, you can end up paying late fees or interest, and even face collection efforts or a lawsuit filed by a creditor or debt collector.

The Takeaway

At some point in your life you may be juggling one or more of these different kinds of debt. Understanding the various types of debts and maintaining a varied mix of loans (including secured, unsecured, installment, and revolving) can help you increase your creditworthiness.

You can also improve your credit by making all of your debt payments on time, and keeping balances on revolving credit (like credit cards) low.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What are the different types of debt?

Debt types include secured (backed by collateral), unsecured (no collateral, higher interest), revolving (flexible credit limit, like credit cards), and installment (fixed payments over a set period, such as mortgages and auto loans). Each type has unique characteristics and purposes.

What is secured debt and how does it work?

Secured debt is a type of debt that is backed by collateral, such as a car or home. If the borrower fails to make payments, the lender can repossess the collateral to recover the loss.

How does revolving debt differ from other types of debt?

Revolving debt, like credit cards, allows borrowers to use a line of credit up to a certain limit, pay it down, and borrow again as needed. This flexibility can be useful but also risky if not managed properly.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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When you carry large amounts of debt across different credit cards and loans, it’s easy to feel snowed under. Making the minimum payment on each leaves you paying a lot in interest and doesn’t make it easy to eliminate all that debt.

One debt repayment strategy you might want to consider is the debt snowball method. The debt snowball method is a debt repayment strategy where you focus on paying off your smallest debts first while making minimum payments on the rest. Once a smaller debt is paid off, you apply that payment amount to the next smallest debt, creating momentum (“like a snowball”) until all debts are eliminated.

Let’s look at what a debt snowball strategy looks like, including how to use a debt snowball calculation table.

Debt Terms Defined

Before we go into creating a debt reduction plan, let’s make sure you’re up to speed on certain debt terms.

Interest Rate: The interest rate is the percent of the amount you borrow that you pay to the lender in addition to the principal.

Annual Percentage Rate: This is the total yearly cost of borrowing money, including interest and fees, expressed as a percentage of the loan amount.

Minimum Payment: Loans and credit cards have a minimum amount you must pay each month on the balance, though you certainly can pay more.

Bankruptcy: If you’re unable to pay off your debts, filing bankruptcy may be a last-ditch solution to consider. Essentially, it reduces or eliminates your debts. Know that it will negatively impact your credit for many years. That’s why it’s worth it to come up with a plan for the ultimate debt payoff strategy.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

What Is the Debt Snowball?

Just like an actual snowball, the debt snowball method starts out small. You first tackle the smallest debt balances you have. Once those are paid off, you apply what you were paying on those to the next smallest debts. You continue to pay at least the minimum due on all your debts.

However, by focusing your attention on one debt at a time, you then free up more money to make larger payments on other debts until it’s all gone. Your snowball of debt repayment, so to speak, grows over time.

Benefits of the Snowball Method

The snowball method is one of the fastest ways to pay off debt. And over time, this method will help you have fewer payments as you pay off credit cards and loans and put more money to the remaining debt.

Drawbacks of the Snowball Method

The smallest debts you have may not be the ones with the highest interest. So while you’re paying off the little loans, the debts with higher interest continue to accumulate interest, which adds to your debt.

Debt Snowball vs. Debt Avalanche

If you have larger loans with higher interest, the debt snowball method may not be your best option. You might also explore another popular way to way to pay off debt: the debt avalanche method.

With the debt avalanche method, you start paying down the loans and credit cards with the highest interest first. By doing so, you reduce the amount of debt you have at those higher interest rates, which slows down the amount of interest that accumulates over time.

Just like with the snowball, you pay off one debt and then put the money you were paying on that debt toward the loan or card with the next highest interest rate until it’s all paid off.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

How Is Debt Snowball Payoff Calculated?

To use the debt snowball payoff method, you’ll need to gather information about all the debt you have. Let’s use the following example:

•   Personal loan 1 balance: $3,000

◦   12% interest

◦   Minimum payment: $100 per month

•   Credit card A balance: $2,000

◦   17% interest

◦   Minimum payment: $25 per month

•   Credit card B balance: $1,000

◦   22% interest

◦   Minimum payment: $30 per month

•   Personal loan 2 balance: $750

◦   8% interest

◦   Minimum payment: $20 per month

Even without a snowball debt payoff calculation table, you can reorder these debts so that you focus on the one with the lowest balance first:

•   Personal loan 2: $750

•   Credit card B: $1,000

•   Credit card A: $2,000

•   Personal loan 1: $3,000

Now that you’ve ordered your debts from least to greatest, you can see how once you pay off the $750 loan, that money can go toward the credit card with the $1,000 balance. Once that’s paid off, you put all that money toward paying off the $2,000 credit card balance, and then finally, to pay off the $3,000 loan.

Debt Snowball Payoff Examples

Let’s look at what the monthly payments for these reordered debts would look like if you were able to set aside $400 a month toward paying them off.

# Payments	Personal Loan 2 ($750)	Credit Card B ($1,000)	Credit Card A ($2,000)	Personal Loan 1 ($3,000)
1	$245	$30	$25	$100
2	$245	$30	$25	$100
3	$245	$30	$25	$100
4	$25.19	$249.81	$25	$100
5	–	$275	$25	$100
6	–	$275	$25	$100
7	–	–	$300	$100
8	–	–	$300	$100
9	–	–	$300	$100
10	–	–	$300	$100
11	–	–	$300	$100
12	–	–	$300	$100
13	–	–	$300	$100
14			$260.72	$139.28
15	–	–	–	$400
16	–	–	–	$400
17	–	–	–	$400
18	–	–	–	$400
19	–	–	–	$400
20	–	–	–	$400
Total principal & interest	$7,568	Total interest	$829

As the chart shows, what might have taken you years to pay off can be paid off in under two years with the debt snowball method.

One way to keep your finances on track while you’re paying off debt is to create a budget. A money tracker app can help you come up with a spending and saving plan that works for you.

Is a Debt Snowball for You?

To determine whether the debt snowball method is right for you, consider how many different debts you have as well as their interest rates. If your larger debts have higher interest rates, you might consider the avalanche method.

But if your interest rates vary, or the smaller debts have higher interest, you might benefit from paying off those lower amounts first before snowballing those payments into the larger debts.

Recommended: Tips for Paying Off Outstanding Debt

The Takeaway

If you’re trying to pay off outstanding debt, you have options. The debt snowball method has been proven effective for many people. If nothing else, it’s a way for you to focus your attention on whittling down debt and minimizing how much you pay in interest.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How long does it take to pay off debt using the snowball method?

The time it takes to pay off debt using the snowball method depends on your total debt, interest rates, and how much extra you can pay each month. Generally, people may become debt-free within a few years, as the method builds motivation by quickly eliminating smaller balances first.

What is the best way to pay off debt using the snowball method?

The debt snowball method pays off your smallest balances first, then rolls those payments up toward the larger debts until they are all paid off.

What are the 3 biggest strategies for paying down debt?

To pay down or pay off debt, you can consider the debt snowball method (which pays off the smallest balances first), the debt avalanche method (which pays off the balances with the highest interest first), or debt consolidation (which provides a new loan with a single payment and single interest rate).

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Photo credit: iStock/Abu Hanifah

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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