Clear card debt in 5 steps
Start with the cost of minimum payments, then compare APR, payoff order, consolidation and early settlement instead of judging an offer by monthly payment alone.
Who this is for: For anyone making minimum payments, carrying several card balances or considering consolidation.
- 1
List every card balance
Record each balance, APR, minimum payment and due date so one urgent card does not hide the cost building elsewhere.
Remember: Prevent new late payments before directing extra cash.
Organise all debts - 2
Calculate the minimum-payment timeline
Minimum payment avoids default but is not a payoff plan. As the payment falls with the balance, the timeline can stretch far beyond intuition.
Remember: Use total interest and payoff date as the baseline for every alternative.
Calculate the cost - 3
Convert flat rates to effective APR
A monthly flat rate is normally charged against original principal and cannot simply be multiplied by twelve; fees are borrowing costs too.
Remember: Compare effective APR and total repayment over the same term.
Compare rates fairly - 4
Compare separate payoff and consolidation
Consolidation may lower rates and simplify payments, but a lower instalment may merely extend the term. Compare fees, total interest and payoff date together.
Remember: Do not rebuild card balances after consolidation.
Compare consolidation - 5
Review every three months
Income, spending and rate changes can alter the best payoff order. Keep a basic emergency buffer to avoid relying on cards again.
Remember: Track falling balances and no new late payments as real progress.
Review the full route
Work through the chapters in order, but return whenever your income, rates or goals change.