The Debt Snowball Effect was ‘created’ by Dave Ramsey, the debt specialist. The normal logical step to take to pay of credit card debt is to do the follow:

1.Order your debts from highest to lowest interest rate.
2.Allocate a certain amount of money to pay toward debts each month.
3.Pay the minimum payment on all your debt except the creditor with the highest interest rate.
4.    Throw every other penny you can find at the debt with the highest interest rate.
5.When that debt is repaid, do not change or alter the monthly amount used to pay debts, but throw all you can at the debt with the next-highest interest rate on your list.

But then Dave Ramsey came up with the following:

1.Order your debt to creditors from lowest balance to highest balance on your list.
2.    Designate a certain amount of money to pay toward debts each month.
3.    Pay the minimum payment on all debts except the one with the lowest balance.
4.Throw every other penny you have at the debt with the lowest balance.
5.When that debt is repaid, do not change the monthly amount used to pay debts. Throw all the money you can at the debt with the next-lowest balance.

The Dave Ramsey way helps you psychologically, because it gives you a massive boost to know you have paid off one of your creditors. You can then cut up that card and close the account and one of your debts are no more.

When a customer is in debt counseling, he pays all creditors evenly according to that the debt counsellors set out for him to pay. The customer may make additional payments to creditors directly. So instead of paying off the account with the highest interest, the customer will make payments to creditor with the smallest outstanding balance. This tactic will keep the over indebt customer motivated and focus to pay off his debt of faster.

If you are over in debt and cannot pay your creditors each month, you should apply for debt counseling.

Dealing With Credit Card Debt