How to Pay Down Credit Card Debt Quickly Using the Snowball Method

Cut credit-card debt with the snowball method.
Cut credit-card debt with the snowball method. (Image: scissors and credit card cut in two image by Warren Millar from

Many Americans are drowning in credit card debt. The White House says that 44 percent of families carry a balance on their cards. The Nilson Report states that the average credit-card balance was $10,679 at the end of 2008. If you want to take control of your credit card debt and achieve quick results that will help keep you motivated to get out of debt, you can use the snowball method. The method got its name because it builds momentum like a snowball rolling down a hill. Essentially, you will pay off your lowest balances first, freeing cashflow to pay the remaining cards more quickly.

Things You'll Need

  • Paper and pencil
  • Calculator

Assemble the most recent statements from each of your credit card accounts. Arrange them in order from smallest balance to largest. If you don't keep your statements on file, you can obtain copies online or by phoning your credit card companies.

Write the following column headings near the top of a piece of paper: Name of Card, Balance, Due Date, Minimum Payment, Actual Payment. Create your snowball-method spreadsheet by writing a line for each of your cards, starting with the lowest balance. Fill in all the information except the last column, Actual Payment. Calculate the total of the Minimum Payment column and write it at the bottom.

Calculate the amount you can afford to spend each month to reduce your credit card balances. If you don't have a budget that includes this amount, you can make a simple budget by adding up your monthly income and subtracting your fixed monthly expenses other than credit-card payments. Allocate as much as you can of the remainder to debt reduction.

Subtract your spreadsheet's Minimum Payment total from your budgeted monthly debt reduction amount. Add the difference to the Minimum Payment amount for the first card on your spreadsheet and write the result in the Actual Payment column for that card. For all the remaining cards copy the Minimum Payment amount into the Actual Payment column. If your budgeted debt reduction amount is less than the total minimum payments, then you will have to rearrange your budget or bring in extra income.

Pay your credit card companies according to the Actual Payment amounts in your spreadsheet. Depending on how much extra you've allocated to the first card's balance, you will pay that card off relatively quickly. Once it is fully paid off, start at the beginning and make a new spreadsheet covering your remaining credit card balances. Repeat until all your credit cards are paid off.

Tips & Warnings

  • Avoid incurring additional credit card debt while you're executing this snowball plan.
  • To maximize your credit score, don't close any of your credit card accounts after paying them off.
  • After you make what looks like the final payment of the full remaining balance on a card, be sure to watch for the next month's statement, which may contain residual interest charges that you must still pay.

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