Strategies For Paying Off Credit Cards: The Debt Snowball

What is a Debt Snowball?

Investopedia defines a debt snowball as “a method of debt repayment in which the debtor lists each of their debts from smallest to largest (not including the mortgage), then devotes extra money each month to paying off the smallest debt first while making only minimum monthly payments on all of the other debts.”

As we all struggle with the financial hurdles associated with the pandemic, it is important to develop effective strategies to improve your overall financial health. The Debt Snowball, often referenced in comparison to the Debt Avalanche strategy, is a trusted approach to paying down credit card debt. Essentially, you’ll be following these set of rules:

  1. Make a list of all of your credit card debts and sort them smallest to largest

  2. Make minimum payments on all of your credit cards

  3. Any remaining money allocated to paying debt will go to the credit card with the smallest balance

  4. Once that card is paid off, move to the next credit card with the smallest balance and allocate additional funds to that card until paid off.

  5. Repeat until your credit cards are paid off.

Strategies like the Debt Avalanche or Debt Snowball are effective but only if you have a clear understanding of your financial profile. If you are not sure where to start, we recommend accessing a copy of your credit report from SmartCredit and utilizing the budgeting tools available to create a game plan.

Battling credit card debt can be difficult, but it can feel overwhelming to try and pay down credit card debt while dealing with other derogatory accounts such as collections, charge offs, and judgments. If you’re struggling to resolve outstanding debts and are looking for a responsible solution to building a healthier credit and financial profile, we encourage you to sign up for a Free Credit Evaluation to discuss the best options for your situation.

Sign up for our intelligent credit repair software here.

For more great resources, check out our Free Resources page at www.premiercredco.com/free-resources.

Alex Grimnes