0% Balance Transfer Credit CardsSnowballing Credit Card Debt Guide
If you have several credit cards with outstanding balances, then you can pay them off quicker and pay less interest if you snowball the payments correctly. Our Snowballing Calculator is also a great help.
Find the highest APR
First you need to arrange your cards in order by the largest APR first, down to the lowest. Your APR should be on your statement. It might be an annual or monthy figure. Our Rate Converter will help you sort them in to the same style.
If your highest APR credit card is particulary high, it might be worth considering switching to a fixed low life of balance APR credit card or even a 0% Credit Card. Use the repayment calculator to see which is cheapest.
Minimum Repayments
Credit cards have differing minimum repayment amounts, usually 1-3%. Make sure you know how much the minimum is for each of the cards you have. Total up the minimum requirements you have to pay each month. Often the minimum required is also printed on your statement. You should also know how much you can afford to pay each month. If you have been overpaying or paying a fixed amount to one of the cards, then add this to your excess funds available figure.
Every month the minimum payment on credit cards will go down, which means you will always have an increasing excess funds available figure.
Biggest first
The key to successful snowballing is to now use the excess funds and pay them to the highest APR credit card first. This way will cause that card to cost you less in interest payments over the life of the debt.
Keep adding the spare funds to this largest card every month. As the months go by, you will have paid off the debt quicker, and spent less in interest than any other payment method.
Our table below shows an example.
| Debt | Owed | APR | Min month 1 | 2nd month |
|---|---|---|---|---|
| Card 1 minimum 2% per month |
£2000 | 17.9% | £40 | £41.20 |
| Card 2 minimum 2% per month |
£3000 | 14.9% | £60 | £58.80 |
| Total paid each month | £100 | £100 |
As you can see it is tempting to pay off the largest debt first on Card 2. But to snowball successfully, we should target Card 1 first as it has a higher APR.
After month 1 and a £40 payment, Card 1 minimum payment will be £39.20 and Card 2 will be £58.80.
To snowball, pay £58.80 to Card 2 (the minimum on £2940), but pay the excess from the initial payment on Card 2 and any extra you can afford to card 1- at least £41.20. Always pay more if you can afford to.
You will still have paid out £100, but more to the highest APR card. Repeat this method every month until Card 1 is paid off, then continue with Card 2.
If you have any questions on snowballing, its free to post on our debt forum
Our Snowball Calculator is designed to help you decide which debts to pay first, and will also tell you when you will clear your debts.