How to Use the Debt Snowball Method to Pay Off Credit Cards

Find out how to use the debt snowball method and why it’s the best strategy to pay off your credit cards.

When the statement comes, you don’t want to open it. Truth is, you owe more money on credit cards than you’d like to admit.

You’re not alone.

I’ve been in your shoes. A few years ago, my credit card debt was over $10,000, but thanks to the best debt payoff strategy, I’ve paid off all my credit cards. Learn how to use the debt snowball method to pay off your credit cards too!

The debt snowball method is the best way to pay off credit cards. Learn how to use this strategy to get out of debt.

What is the debt snowball method?

The debt snowball method is a strategy for paying off debt where you focus first on the debt with the lowest balance owed. As you start paying off your debts, you gain more and more momentum because you continue to pay the same amount toward your cards each month.

Why the debt snowball is the best strategy for paying off credit cards

The debt snowball method works to build momentum in paying off your debts. As you pay off more debts, the larger payments add up quickly!

The debt snowball strategy might be best for you if:

  • You need the motivation that small successes bring. You’ll reach the first goal faster with this method.
  • Your credit card balances are varying sizes.
  • Your interest rates are similar.

Step by step guide to the debt snowball method:

1. Determine the balance owing and minimum payment for each credit card

For each of your credit cards, gather up the most recent statement. Find the current balance and minimum payment. (Only include the required minimum-not any extra amounts you may have been paying)

If you do not have a monthly statement handy, call up the credit card company to get this information.

2. Determine what order to pay off your credit cards

Now you need to figure out the the order you will pay them off. With the debt snowball method, you’ll pay your credit cards off from the smallest to largest balance. The credit card with the lowest balance is paid off first.

Create a list of your credit cards and number it. You’ll want to list your cards in balance order with #1 being the one with the lowest balance, #2 is the next lowest balance, until you’ve listed all your cards.

For example:

  • 1st- $400
  • 2nd-$800
  • 3rd-$1,500
  • 4th-$4,500
  • 5th-$6,700

3. Determine your monthly debt payment budget

Take a close look at your budget. How much can you afford to budget each month for debt payments (including any required minimum payments)?

For example, if your minimum payments total $300, can you pay more than that each month? Can you budget $500 a month towards your credit cards?

4. Pay only the minimum on all cards except the lowest balance card

Since you are using the debt snowball method, you’ll want to pay just the minimum required payment on all the other credit cards. You’ll focus all your extra debt payments to the first one on your list.

5. Use the debt snowball to pay the lowest balance first

You’ll see fast progress on your debt payoff when you focus on the one credit card with the lowest balance owing. All your extra payments will go to this debt. You’ll continue to make minimum payments on all the rest of your credit cards.

After you’ve paid the minimum on your other credit cards, determine what is left of your debt payment budget. This remaining amount should be paid to the credit card with the lowest balance.

6. Repeat until each credit card is paid off

Once the smallest credit card is paid off, you’ll repeat the process, just with a new credit card as the one to focus on.

When you pay off the first credit card on your list, you’ll move down to the next card. The payment that you were paying on the first one (minimum + extra) should now go as an extra payment to the next card.

Your total monthly debt payments should stay the same even as your credit cards get paid off.

Use the snowball method to get out of credit card debt

When you are trying to pay off multiple credit cards, the debt snowball is the best strategy. You will focus on one card at a time and be able to see quick wins. As you begin to get out of credit card debt, you’ll be motivated to continue!

Ready to get started with your debt snowball?

Check out my Debt Payoff Planner and start tracking your payments!

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