The Minimum Payment Trap
Credit card companies set minimum payments deliberately low — typically 1–2% of the balance or $25, whichever is higher. This keeps you paying interest for years. On a $5,000 balance at 22% APR, paying only the minimum means you'll spend over 14 years clearing the debt and pay nearly $6,000 in interest — more than the original balance.
Method 1: The Avalanche (Lowest Total Cost)
Pay minimums on all cards, then put every spare dollar toward the card with the highest interest rate first. Once that's cleared, roll that payment onto the next highest-rate card.
This method minimises total interest paid and is mathematically optimal. The downside: if your highest-rate card also has the largest balance, it can take a long time before you see your first card cleared — which can feel demotivating.
Method 2: The Snowball (Fastest Psychological Wins)
Pay minimums on all cards, then attack the card with the smallest balance first, regardless of interest rate. Each cleared card frees up more cash for the next one, creating momentum.
Research from Harvard Business Review found that the snowball method often leads to better long-term outcomes in practice, because the psychological reward of clearing accounts keeps people motivated.
| Method | Best For | Total Interest | Motivation |
|---|---|---|---|
| Avalanche | Minimising cost | Lowest | Slow wins |
| Snowball | Building momentum | Slightly higher | Fast wins |
What to Do on a Low Income
When cash is tight, even small increases above the minimum make a significant difference. Adding just $50/month above the minimum on that $5,000 balance at 22% APR cuts the payoff time from 14 years to around 4.5 years and saves over $4,000 in interest.
Practical strategies to find extra money: cancel unused subscriptions, sell unused items, put tax refunds entirely toward debt, and negotiate a lower interest rate directly with your card issuer — many will agree to a temporary reduction if you ask.
Balance Transfer Cards
A 0% balance transfer card can be a powerful tool if used correctly. Moving a $5,000 balance to a card with 0% for 18 months gives you 18 months to attack principal directly. The catch: most charge a 3–5% transfer fee, and if you don't clear the balance by the end of the promo period, the remaining balance often rolls to a high rate immediately.
Use the credit card payoff calculator below to model your exact scenario — enter your balance, APR, and monthly payment to see exactly when you'll be debt-free and how much interest you'll pay in total.