What's the Best Way to Pay Off Credit Card Debt? The Snowball Method.

By Tracy L. Hirsch

If you’ve been searching for an effective way to pay off credit card debt, this is it, and it’s super easy to follow.

Do you have debt on multiple credit cards? Have you been making the minimum payments on all of them, and feel depressed seeing the balances hardly budge? You’re not alone.

According to debt.org, more than 189 million Americans have credit card debts. Out of those millions of Americans, each household has an average of four credit cards with an average total balance of $8,400.

If this describes your situation, you might be feeling hopeless. However, it’s important to know that in many situations, you can pay off your credit card debt, and end up living debt-free.

You can achieve that by looking closely at the numbers. Once you do, you can implement the ‘Snowball Method,’ which is done in three simple steps:

1.) Create a list of your credit card debt information. While sitting down and assessing your debts on multiple credit cards can be overwhelming and daunting, it’s the first step to getting rid of it. First, you need to write or type up a list of all the balances. Type them up in order from smallest balance to largest balance.

Next to each total, you’ll also need to list the minimum monthly payment that is required for each card. It might look something like this:

                               Total          Min. 

American Express:   $548            $25

Mastercard:              $1,307         $35

Visa:                        $2,252          $50

Discover:                 $4,023          $95

The Snowball Method can help you pay off all of your credit card debt in as little as 12 to 24 months.

2.) Assess your budget. Look at your household budget, and see how much money you have left at the end of each month. If you’re bringing in a net income of $2800 a month, and you have $800 left, put 10% of it into your savings account, and put the rest toward your debt. In this example, you would have $720 a month to put toward your debt.

3.) Pay off each debt one at a time. Instead of dividing the $720 four ways and putting $180 toward each of the cards, pay the minimum on the rest of the cards, and put a large lump sum toward the card with the smallest balance.

For example, if we look at the list above, you would pay the minimum payment on the Mastercard, Visa, and Discover cards, and put a large payment toward the American Express balance.

So if you had $720 a month to put toward credit card debt, you would put $180 ($35 + $50 + $95) toward the three cards with the highest balances, and put $540 toward the card with the smallest balance.

By doing this, you would basically pay off the entire balance on the American Express card in one payment!

4.) Continue paying off the credit cards in order of the lowest balance. In this scenario, once you paid off the American Express card, you would put large payments toward the Mastercard balance, and pay the minimum payment on the Visa and Discover cards, and so on.

Why is this method so effective? If you continued this method in our sample scenario, you would pay off $8,130 worth of debt in approximately 12-14 months!

The most important reason that his method works is that it gives you hope that you’ll get out of debt. When you pay off an entire card balance, it’s incredibly encouraging and motivating.

To the contrary, when you put a little amount toward each balance, it seems like there’s not a light at the end of tunnel, as your balance on every single card goes down little by little. When you see that you’ve taken an entire credit card off of your list of debts, it makes you want to pay the rest off so that you can live debt-free.

The other reason is that it forces you to stick to your budget. In the example above, if you have $720 left over each month after paying all of your household bills, it’ll be tempting to pay only the minimum on every single credit card, and then spend the rest on unnecessary items.

While buying the latest gadgets may give you a temporary serotonin boost, it won’t give you an escape from your credit card debt.

Now more than ever, it’s important to continue to pay off debt so that we can save for any unexpected expenses that may arise in the future. When utilizing the ‘Snowball Method,’ you could potentially pay off all of your credit card debt in as little as 12 to 24 months.

If you’re in a place where you have more than $10,000 in credit card debt, plus other debts that you are unable to pay, it could be beneficial to consider filing for bankruptcy. It’s important to consider that when you can’t afford to pay the minimum payments on all of your balances, as not making payments will have negative repercussions.

If that describes your situation, please text me or call me at (502) 435-2593. I offer free consultations to help you decide if your debt is manageable (where you can pay it off yourself), or if it’s too high to the point that you’re in danger of having your home go into foreclosure or having your wages garnished.

There’s no shame in asking for help, and I’m happy to provide you with the information that you need so that you have a stable financial future.

All the best,

Tracy L. Hirsch


Need a free consultation? Text or call me at (502) 435-2593!

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