Pay Off Credit Cards – Snowball Method

A popular way of paying off credit cards is the Snowball Method.

Unlike the more traditional method of paying off credit card debt in order of interest rates (highest to lowest) – the Snowball Method involves paying off the smallest balances first to get an immediate sense of success. Depending on your balances and interest rates, this method may cost you more in interest fees.

Warning, this form of debt repayment should only be undertaken if you can do it and keep all of your other debts and bills paid and up to date.*

To make the Snowball Method work – you have to stop using your credit cards – and commit yourself to a cash-only life style. Before you begin the Snowball Method, we recommend you set up an initial emergency fund.

Start by gathering of all your credit card bills together and record them showing type of credit card, balance owing, minimum monthly payment, and interest rate. Organize the list by the balance owing (lowest to highest).

This is a sample of what it might look like:

Determine how much, in addition to the monthly minimum payment of $200.00, you will be able to consistently put into the plan. For this example – we will use $500.00 over the monthly minimum $200.00, which means that every month you would be putting $700.00 towards your credit cards.

In month one – you would:

1. make the monthly minimum payments on all of the outstanding card balances


2. pay off the lowest balance card – the Gas Credit Card


3. apply the remainder on the next smallest card – the Department Store 1 Card

In month two you will:

1. make the monthly minimum payments on all of the outstanding card balances


2. pay off the amount owing on the Department Store 1 Card


3. apply the remainder to the next smallest card – the Department Store 2 Card

For each subsequent month, you will continue to pay the monthly minimum payments on all the outstanding cards – and put the rest of your Snowball money on the credit card with the lowest balance.

As you can see, the Snowball Method provides fast success, and as each card is paid off, the sense of achievement grows – making it easier to stick to the plan.

Snowball Method Summary:

• stop using your credit cards,


• set up an initial emergency fund,


• make minimum monthly credit card payments on all outstanding cards,


• put the remainder of your monthly Snowball money on the credit card with the lowest balance,


• continue paying off credit cards in order of their total balance (lowest to highest), and


• stick with it!

* If you are too far in debt for your income to handle repayment, we recommend you speak with a Bankruptcy Trustee. In the Greater Toronto Area, you can book a free consultation at any of our six locations. Our Certified Professionals will go over your finances with you, and explain all of your options to you.