Credit & debt
Which debt to pay first, and what really moves your score.
Average card rate when you carry a balance 22.36% Aug 2026
Same debts, same monthly budget. Which order finishes cheaper?
Your debts
4 things to know
Costly mistakes
Paying only the minimum$7,811
InsteadThat's the interest on $5,000. Pay a fixed amount instead: $192 a month clears it in three years.
Carrying a balance to “build credit”$1,118/yr
InsteadInterest does nothing for your score. Pay the statement balance in full every month.
Letting one bill go 30 days late7 years
InsteadThat is how long it can stay on your report. Put every minimum on autopay, then pay more by hand.
Closing your oldest cardscore drop
InsteadIt shortens your history and raises credit utilization. Keep no-fee cards open with a small bill on autopay.
Opening new cards before a big loanhigher rate
InsteadEach application is a hard inquiry. Wait 6 to 12 months before a mortgage or car loan.
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Your score sees the balance on each statement, not what you owe after paying.
Add a third card
Paying only the minimum, next to a fixed payment that clears it in three years.
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Every number, worked out
A typical mix of debts and one monthly budget. Both plans finish the same month; the snowball wins a debt sooner and costs a little more.
| Four debts, $1,000 a month in all | |||
| 1 | Visa24.99% APR, minimum $210 | 8,400.00 | |
| 2 | Store card19.99% APR, minimum $35 | 650.00 | |
| 3 | Personal loan11.90% APR, minimum $145 | 3,200.00 | |
| 4 | Car loan7.49% APR, minimum $300 | 10,500.00 | |
| 5 | Total owed | Lines 1 to 4 | 22,750.00 |
| 6 | Extra each month beyond the minimums | $1,000 − $690 | 310.00 |
| Avalanche: highest rate first | |||
| 7 | First debt paid offVisa | month 20 | |
| 8 | Debt-free | month 27 | |
| 9 | Total interest | 3,657.66 | |
| Snowball: smallest balance first | |||
| 10 | First debt paid offStore card | month 2 | |
| 11 | Debt-free | month 27 | |
| 12 | Total interest | 4,039.43 | |
| 13 | Price of the quicker wins | Line 12 − line 9 | 381.77 |
Sources (7)
- myFICO (Fair Isaac): What's in my FICO Scores? (35 / 30 / 15 / 10 / 10)
- FICO: FICO Score Credit Insights: average FICO Score 714 (spring 2026) (Mar 24, 2026)
- Federal Reserve Board: Consumer Credit (G.19): credit card and auto loan interest rates (FRED TERMCBCCALLNS, TERMCBAUTO48NS)
- Kellogg School of Management, Northwestern University: Gal and McShane, 'Can Small Victories Help Win the War?' (Journal of Marketing Research, 2012): the snowball approach to debt (2012)
- Consumer Financial Protection Bureau (12 CFR 1026.7(b)(12)): Regulation Z: repayment disclosures on credit card statements (minimum payment warning, 36-month comparison)
- Equifax, Experian and TransUnion: AnnualCreditReport.com: free weekly credit reports
- Consumer Financial Protection Bureau: Credit card interest rate margins at all-time high: the average margin over the prime rate rose from 9.6 points in 2013 to 14.3 in 2023 (Feb 22, 2024)