DePaul University Financial Fitness > Tackle Overspending > Minimize Credit Card Debt

Minimize Credit Card Debt

Each month that you carry over a balance on your credit cards, you will owe what you charged plus interest. To maintain control of this debt, always try to pay more than the minimum if you can't pay the balance in full. If you have debt on more than one card, use the roll-down method to tackle it efficiently.

Use the roll-down method to save money

Do you think it's a good idea to tackle the smallest debt first? Think again. Paying the smallest debt first can allow your debt to snowball because larger debts can accumulate tons of interest! When you have multiple debts, it is usually advantageous to use the roll-down method instead of the debt-snowball method. By focusing all your extra cash on the highest interest balance, while paying the minimums on other balances, you can potentially save yourself hundreds of dollars.

Use this calculator to create a roll-down plan for you.

The roll-down method to eliminating credit card debt applies two simple principles to minimize credit card debt:
  1. Pay off the balance with the highest interest rate first.
  2. When a card balance is paid in full, roll amount down to card with next highest interest rate.

Sample Case — Jane Q. Student
In the following scenario, Jane has three credit cards and a total debt of $1,600. The three cards are:

  • Target: $800 total with 24% interest rate
    • $20 minimum payment
  • Visa: $400 total with 17% interest rate
    • $16 minimum payment
  • MasterCard: $400 total with 17% interest rate
    • $16 minimum payment

The total monthly payment Jane owes to all three cards is $52. Jane commits to adding more funds ($30) to her total monthly payment. She then applies this additional amount to card with highest interest, in this case the Target card. Once the balance on the high interest card is paid in full, she continues to pay $82 per month, but rolls the amount down to card with next highest interest rate. By applying the roll-down method, Jane eliminates her debt in just about two years.

First Cycle Second Cycle Third Cycle
Target $50 Paid in full Paid in full
Visa $16 $66 Paid in full
MasterCard $16 $16 $82
Total Payments $82 $82 $82

By comparison, if Jane had paid the minimum payment to each card each month, the $1,600 debt would have taken over six years to eliminate:

Original Payment Plan Roll-Down Method
Years to pay debt in full 6 years, 10 months 2 years, 1 month
Monthly Payment $52 (first 5 years)
$20 (last year and 10 months)
$82
Interest Paid $1,020 $353

Help is available

If you are in credit card debt, and want to create a plan using the roll-down method, set up a free financial advising session​.​​