I have $18,000 on three credit cards. Where do I start?

The question

An illustrative letter.

The answer

My dear, a balance that barely moves is not a sign that you are bad with money. It is how minimum payments are built, and you are far from the only one who has felt stuck this way. You have already done the hardest part, which is looking at it squarely and asking. Now let's give that money a plan.

Why paying the minimum keeps the balance stuck

Every month, your card company adds interest to what you owe before your payment lands. A simple way to picture it: take the yearly rate, divide it by twelve, and that share of your balance is added each month. On a high-rate card, much of each minimum payment goes to that month's interest, and only what is left brings the balance down.

A minimum payment is set to keep the account in good standing, not to clear it quickly. On many cards it also falls as the balance falls, which feels like relief but stretches the debt out even longer. If you keep paying what you pay today, even when the required minimum drops, you are already ahead of where the card company expects you to be.

Avalanche: the highest rate first

• Pay every minimum, every month. No card falls behind, and no late fee undoes your work.
• Send every extra dollar to the card with the highest interest rate. That is the most expensive money you owe.
• When that card is paid off, keep its payment going. Roll it, along with your extra, onto the card with the next highest rate.

Because the most expensive debt shrinks fastest, the avalanche usually costs the least interest in total and often finishes soonest. The figures further down this page show it worked out on three cards like yours.

Snowball: the smallest balance first

The snowball uses the same steps in a different order. Every minimum still gets paid, but the extra goes to the card with the smallest balance, whatever its rate. When that card reaches zero, its payment rolls onto the next smallest, and the amount you put toward each card grows as you go.

It often costs more in interest than the avalanche. What it gives you is a card closed for good sooner, and for many people, seeing one balance reach zero is what carries them through the long middle months.

Which one fits you?

Both work, and both beat paying minimums alone. The real question is which one you will keep doing for a year or two, through birthdays, car repairs and tired evenings.

If numbers motivate you and you can stay patient, the avalanche is usually the cheaper road. If you have tried before and lost heart, the early win of the snowball may be worth what it costs. Some people clear one small card first for the lift it gives, then turn to the highest rate. There is no prize for the perfect method, only for the plan you finish.

The Debt Payoff Planner works out both on your own numbers, side by side, so you can see the difference in months and in dollars before you choose.

Finding the extra each month

The extra does not have to be large to matter. Start with the last two months of spending and circle anything that surprised you: subscriptions you forgot, takeout on busy nights, small purchases that quietly add up. You are not cutting joy out of your life, only choosing where a little of it goes for a season.

Extra can also come from a raise, a tax refund, a side job or a bill that ends. Decide now that a share of any new money goes to the card at the top of your list, before it has a chance to disappear. And while you pay these cards down, try to stop adding new charges to them, or the balances will move in both directions at once.

What about a balance transfer or a consolidation loan?

You will see offers for both. A balance transfer moves what you owe onto a card with a low introductory rate for a set number of months. It can save real interest, but most charge a fee to move the balance, the low rate ends on a fixed date, and the rate after that can be high. It helps most when you can clear the balance before the promotion ends and you stop using the old cards.

A consolidation loan replaces several card balances with one loan at a fixed rate and a fixed end date. One payment and a lower rate can make the plan simpler to keep. The danger is that the cards, now empty, slowly fill up again. Before you sign, compare the total you would repay, fees included, with what your current plan costs.

Neither is a cure on its own. Both are tools for someone who has already decided to stop adding to the debt.

When to talk to a nonprofit credit counselor

If you cannot cover all three minimums, or you find yourself using one card to pay another, it is time to talk to someone. A nonprofit credit counseling agency can go through your budget with you for free or for a small fee. In some cases it can set up a debt management plan, where it asks your card companies for lower rates and you make one monthly payment through the agency.

Look for an agency that is a nonprofit and accredited, that puts its fees in writing, and that does not press you to sign anything on the first call. Be wary of anyone who promises to make your debt disappear or asks for large fees up front.

Wherever you begin, begin this week. Write down the three cards, choose your order and make the first extra payment, however small. Then let the plan do its quiet, steady work.

One thing to do this week

Write down each card's balance, rate and minimum payment in one place.