Credit Card Snowball Strategy


“Honestly, I’m not spending any more than I make, but there’s nothing left for savings.”

“Let’s take a look at where your money goes, starting with the credit cards.”

“I’m never late. I’ve got them set to take the minimum payment right out of my checking account!”

“uh huh. How much more do you pay to the cards every month?”

“Well, when I get some extra money, I’ll put it on them.”

“If you want to have extra money, let’s get those cards paid off. At 18% interest, carrying a balance costs you $15.00 per month for every $1,000 you owe. But some of those cards charge 24%, or $20 per month per $1,000.

“So how do I pay them off?”


Our favorite strategy for eliminating credit card debts is to list all the cards, their balance due, and the minimum payment amount. Put the cards in order from the smallest balance due to the largest.

Total the minimum payments, then commit to making an additional amount, even if it is just double the smallest minimum payment.

Apply all of the additional amount to the card with the smallest balance, every month, until that card is paid off.

Now apply all the additional funds to the next smallest balance card until it is paid off.

Repeat with each successive card until they’re all paid off.

This “snowball” strategy works great if the spending is limited to income after making the payments. In other words, it takes discipline to get out of debt.

It takes discipline to stay out of debt.


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