Credit Card Minimum Payments

I have been a member of the Dave Ramsey Total Money Makeover forums for over two years now, and in that time I’ve made several virtual friends, and read many inspiring stories of families who clawed their way out of debt.

I recently read a comment from a new member working their way through baby step two–the dreaded debt snowball. One of the things the new member was struggling with was resisting the temptation to make more than the minimum payment on all her debt accounts.

Generally Speaking, More is Better

When it comes to credit card minimum payments, most financial experts agree more is better.  In fact, some go as far as suggesting that cardholders try to make double the minimum payment to lessen the time they are in debt, and reduce the amount of interest they are charged.

Financially, this makes perfect sense. However, by spreading out your available dollars across several cards you are effectively only reducing each card’s balance a small amount.

Before getting started, it makes sense to get as much debt as possible to the lowest possible rate. This way, your payments will make more of a dent.

Pay More Only On One Card

The main idea behind the debt snowball is paying only the minimum payments on ALL of your debts, and throwing any additional money at the smallest debt.  For example, if you owed $5,000 across five credit cards, your total minimum payments might be around $100 per month ($20 per card).

Now let’s assume you are living frugal, and/or earning extra money, and can apply $500 towards debt repayment.  If you split that amount equally across all five accounts you would only reduce each card’s balance by $100 per month (minus accrued interest).

Under the debt snowball plan minimum payments would be made on all but the card with the lowest balance ($80), and the remaining $420 would be paid towards that smallest card.  Depending on the size of the starting balance, $420 can bring a credit card balance to zero fairly quickly.  When that card is paid off you will only be making three $20 minimum payments and the remaining $440 snowball payment will be applied to the next smallest card, and so on.

The idea of paying more than the minimum payment has been reinforced since the early days of revolving charge accounts, and it is an effective way to pay off debt faster.  However, if you have several debt accounts it might make sense to focus your efforts on paying one debt at a time, while maintaining a current status on other accounts by only making the minimum payments.

If you can only make the bare minimum payments on your credit cards that can be incredibly expensive over time. But using a weak credit card can be even more costly. Research and compare some credit cards that will go a long way in helping you to save on those outrageously expensive finance charges. Also, if you like to travel but are having a hard time saving money on your vacations, you should consider some of the better frequent flyer credit cards that you can easily find online.


  1. The debt snowball also works really well when you have cards with much higher APRs than the others. You take care of those first so that you don’t throw away as much money in the long run.

    There are also the non-monetary benefits of paying off whole credit cards. It feels so good to do that it reinvigorates you for paying off the next one as soon as possible. I know it does for me. We are currently paying off all of our debt (except for the house) to free up more money for savings and so that I can save up and purchase my dream car with as much cash as possible. We feel really good every time a credit card gets paid off. Another one will be going down this month!

    To get a real eye-opener, go here:
    and find out how much time and money it can really cost to pay the minimum. It’s a sobering feeling seeing that it would take 30 years if you paid some of the minimums these credit card companies give you! Always pay more if you have it!

  2. We are doing the snowball and so far it is working like a charm. It is hard to be patient, but when that payoff comes….it is a beautiful thing! I can’t wait to pay down our student loans next.

  3. This is the strategy I used to kill debt. There was never an excessive amount because I’ve always been afraid of it, but I did have student loans, and at times I’ve carried a credit card balance. I killed the last of my non-mortgage debt, which was a personal line of credit for some home repairs, last month. Boy, did that ever feel good.

    To those who are still working on the snowball, when you get to the final payoff YES it does feel just as good as you imagine it will. In fact, it’s even better. It’s like a huge load lifting off of you, and finally you can breathe.

    Now all that’s left is my mortgage, and as soon as I fluff up my cash cushion a bit better to adapt to this scary economy, that mortgage is going DOWN, baby. I’m hanging out with people who have paid off their mortgages and encouraging them to talk about how good it feels to be 100% debt free. I use that as inspiration to work harder.

  4. @Krista, you’ll notice that I said something to that effect in my post as well. I’ve done exactly that and paid off my highest rate cards first and then worked from the smallest to the largest between those debts in which the interest rates don’t differ enough to make a significant difference.
    Unfortunately, the traditional debt snowball approach is what is needed in these modern times. People’s attention spans and gratification time limits have shortened dramatically. For those that cannot deal with the wait, the “Ramsey debt snowball” is best. I prefer the “fiscally responsible debt snowball” approach with high APR items going down first followed by lower ones.

    @Dana and anyone else who looked at that link,
    Scary isn’t it!! I’ve always paid over the minimums, but I plugged in the numbers just to see. It said my biggest credit card would be paid down in 385 months!! 32 YEARS?!?! I don’t think so. What people need to keep in mind as to why these take so long is that the minimum payment amount decreases as the debt grows smaller. You may say “yay, smaller payments” but it’s just the company’s way of continuing to collect interest money for the long term. If you make a payment of $X, make sure to keep paying that much even when your minimums go down. Doing that will decrease the payoff time to about 5-6 years. Try it in the calculator and see!

  5. We are following Dave’s plan – we have an emergency fund, no credit card debt and are using our debt snowball to pay down the smallest loan first. We have five student loans: $50K, $34K, $23K and $11K and $3K. At first I wanted to use our ‘snowball’ to pay down the loan with the highest APR (the APR’s range from 7.1% to 0%). If I was to focus on the largest APR we would be working on that $50K loan and it would take us 17 months to pay it off (paying about $3K a month). If within those 17 months something drastically bad happens to our income, my family would still have to make minimum payments on all five loans.
    If we follow Dave’s plan and focus on the smallest debt we’ll have the first $3K loan paid off in 1 month. The next $11K loan paid off in 4 months. The next $23K loan paid off in 8 months. With Dave’s plan we’ll have three loans paid off in 14 months. So if something happens after that we’ll only have to worry about making minimum payments on the two remaining loans. I did the math – in our situation using the snowball to pay down the smallest loans works best and we will pay off all our debt at about the same time we would if working on the largest to smallest. However, I like knowing if one of us looses a job down the road we won’t have all five loans still hanging over our heads.

  6. Although I am following the highest interest rate first format, I understand Dave Ramsey’s, pay the lowest balance first, debt snowball’s psychological lift. It makes perfect sense to me. Having said that I was very surprised to hear Dave Ramsey recently tell a caller to pay his smaller debt first even though that debt was on a zero percent loan. That makes no sense to me at all!

  7. A great addition there Holland.

    Keep in mind though that the modified snowball plan I recommend (pay off higher interest items first) works best for revolving accounts where the payment will scale with the amount of debt remaining on that account. A student loan is a simple loan where there is a fixed payment and interest is calculated into the payment at a fixed rate. The payment basically never changes. Once we pay down our revolving accounts using the highest interest first system, I will be attacking the 0%-interest revolving accounts and the low APR simple loans (car, mortgage) on a smallest-first basis.

    In your case, I would wholeheartedly agree with paying the smallest first to free up monthly income more quickly. With that income free, you may add it to the debt snowball or use it elsewhere as circumstances dictate. At some point, I would recommend either investing it or building an emergency fund so that you may continue to make payments if a job is lost.

  8. Bleh, that shows I shouldn’t respond to comments at the end of the work day.

    @Holland, sorry, while I was writing I forgot that you already had an emergency fund. Just pay everything off and enjoy the financial freedom to save, invest and live wonderfully in your retirement!

  9. Thanks for your comments DavidK. I absolutely agree that paying down high interest rates first makes sense. And I understand first hand why Dave Ramsey encourages people to pay down the smallest loans first – they see results quicker and they’re gratifying. He wants people to get motivated to go after their debt and nothing gives you ants in the pants like paying off a loan free and clear! 🙂

  10. I feel silly saying this, but I never heard of Dave Ramsey until reading this post. I’ve put his book on my Amazon wish list to remember to buy later on. It’s worth a read I assume?

  11. With paying minimum amounts on credit cards and revolving credit that re-calculated the repayments, I calculate at paying the minimum amount when the card is maxed unless I am doing debt reduction. Which will be starting very soon, since we just moved and have no intention of moving for a few years (we are renters).

  12. I have Fixed Rate at 3.99%. The credit card company increase from 2% to 5% the capital. I called them and gave me the following options: First, pay the increased amount of payment (my case from $210 to $498)……… or change my fixed rate to 7.99% to lower to 2% the capital. IS IT RIGHT?……….