BET Lesson 8 of 11 · 5 min read
Pay off debt faster
Minimum payments keep you in debt for years. The snowball and avalanche methods get you out sooner.
Why minimum payments cost so much
Credit card companies often calculate interest every day on what you owe, so a balance you carry grows quietly. Paying only the minimum stretches a small purchase over years.
| Purchase | $300 |
| Interest rate (APR) | 23% |
| Monthly payment | $15 |
| Time to pay it off | over 2 years |
| Total paid | $382 ($82 in interest) |
Tip
If your card has a grace period, paying the full statement balance by the due date means you pay no interest on purchases at all.
Two proven ways to pay it down
Both methods start the same way: keep making at least the minimum payment, on time, on every debt. Then put any extra money toward one debt at a time.
- Snowball: put the extra toward the smallest balance first. When it’s paid off, roll that payment into the next smallest. Quick wins keep you motivated.
- Avalanche: put the extra toward the highest interest rate first. It can save you more money in interest.
| Store card: $500 at 18% | Snowball pays this first |
| Credit card: $2,000 at 24% | Avalanche pays this first |
| Car loan: $4,000 at 7% | Both pay this last |
Choosing between them is a personal preference. Either way, you’ll be debt-free much faster than by making minimum payments.
Remember
- Minimum payments can turn small purchases into years of interest.
- Always pay every minimum on time, then put extra toward one debt.
- Snowball (smallest balance first) for motivation; avalanche (highest rate first) to save the most.
Plan your extra payment
In BET, add your debt payments as recurring entries, including the extra amount, so they’re part of every month’s plan.
Sign in with Google to try itSources and further reading
- Reducing Debt: The Snowball and Avalanche Methods (Alabama Cooperative Extension System)
- Ways to Get Out of Debt (University of Wisconsin–Madison Extension)
- Minimum Payments on Credit Cards (Federal Trade Commission)
- How does my credit card company calculate the amount of interest I owe? (Consumer Financial Protection Bureau)