Math Problem: Best Paying Off Credit Card Method, Snowball or Orzman?

The “Snowball” method for paying off debt is very popular, but what about one offered by Suze Orman? Which one results in paying the least money and getting out of debt the fastest? First, take a peek at JLP’s description of both.

David Ramsey’s Snowball Method:

1) Make a list of all your credit cards, ranked in order from the highest balance to the smallest balance.

2) Beginning with the card with the smallest balance, pay as much as you can on that card while paying the minimums on the other cards.

3) Once the card with the smallest balance is paid off, take the amount you were paying towards that card and apply to the card with the next lowest balance.

4) Keep on keepin’ on until ALL the cards are paid off.

And here’s Suze Orman’s The Road to Wealth method:

1) Figure out the largest possible amount you can afford to pay each month toward all your credit card balances together.

2) Add $10 to each minimum payment that your credit card company is asking you to pay.

3) Add up all your minimum payments plus $10 added for each card.

4) Hopefully the difference between the figure found in Step 1 is GREATER than the figure in found in Step 3. If so, apply the difference to the card with the HIGHEST interest rate.

5) Once that card is paid off, you continue the process (Steps 1 – 4) until ALL the cards are paid off.

Which method pays off debt faster? Which method costs the least? Demonstrate in the comments using hard numbers. — BEN POPKEN

Dave Ramsey’s Snowball Method vs. Suze Orman’s Method for Getting Out of Debt [All Financial Matters]


Edit Your Comment

  1. dustboo says:

    who the fuck is suze orzman?

    her name’s orman. and you actually use it correctly once, after you butcher it twice.

    didn’t you say you had a new editor?

  2. rachmanut says:

    A lot of unsaid assumptions affect the difference between these methods. Let’s leave off the +$10 part of Orman because it only confuses the comparison. Without that $10 the difference is :
    ramsey: spend excess on lowest balance
    orman: spend excess on highest interest

    if all balances are approximately equal but one card has a much higher interest rate than the others, then obviously orman is better. if all interest rates are approximately the same, but one balance is close to empty then obviously ramsey is better (because this pares down the number of minimum balances you have left quicker).

    and if all balances are approximately equal and all interest rates are approximately equal, then what? hmm…i’m guessing it’s best to get rid of additional minimum balances, but i should do the math and get back to you…

  3. a says:

    Haha, Orzman.

    I don’t think it was a typo. Ben’s just getting in touch with his gangst-izzle roots.
    What up, Ben Popzken?

  4. rachmanut says:

    if you can pay off a credit card this month, it’s best to do so. otherwise, it’s always best to pay off your highest interest rate, not your lowest balance.

    Let’s say we have two credit cards, A and B. A has interest rate a and balance x, B has interest rate b and balance y. x>y and a>b (otherwise the lowest balance is the highest rate and both methods agree). Without loss of generality assume no minimum payment and that the interest rate is calculated once monthly. Assume the payment you make is k.

    Your total balances next month if you pay off A (orman) is x-k + a(x-k) + y + by.

    Your total balances next month if you pay off B (ramsey) is x + ax + y-k + b(y-k)

    x-k + a(x-k) + y + by
    = (a+1)x + (b+1)y – (a+1)k

    y-k + b(y-k) + x + ax
    = (a+1)x + (b+1)y – (b+1)k

    cancel all common terms and you’re left with -(a+1) for orman and -(b+1) for ramsey. a is higher than b, so -(a+1) is lower than -(b+1).

    so, orman. is my math right?

  5. jendomme says:

    This is all well and good, however there is a crucial mistake is these analyses. You need to take into account the interest you are incurring, not just the balance of the cards themselves. While cc interest isn’t capitalized, you still need to take this into account.

    Here’s a better method than the two mentioned above: develop some self-control/discipline and live within your means.

    No wonder this country has a negative savings rate.

  6. apstaats says:

    Regardless of how much the balances are on the credit cards, you are always better off paying off the highest interest first. Assuming you are paying the maximum amount you can afford with both methods, Suze Orman’s method will get your debt paid off faster.

    Even David Ramsey admits he uses this method. His reasoning for recommending the snowball method is purely for behavioral reasons– to encourage the person who is paying off the debt (it makes it LOOK like the debt is being paid off faster).

  7. Hitchcock says:

    Orman’s method is best provided there is some disparity in interest rates. The reason to go for the “snowball” method is to reduce the number of payments you have to make each month.

    This has two benefits. 1) There’s less chance of forgetting to make a payment or having the bank claim a payment came in late. 2) If something happens one month that eats into the income you would normally use to pay cc bills, you won’t have to pay as much to meet the minimum payment requirements. $15k spread over 5 credit cards have a higher combined “minimum payment” than $15k over 2 credit cards.

    Oh, and the snowball method may have a third benefit, it gives you a sense of accomplishment. Using the Orman method you may be stuck having balances of 5 credit cards forever, where with the snowball method you get the accomplishment of “I’ve paid off this credit card” coming up every few months which might provided the psychological push to help you keep to the plan.

  8. branded says:

    I only see one flaw in any of the above enlightened observations and/or suggestions: Bush starts nuclear war in two weeks – with whomever brown people are now the enemy.

  9. ColoradoShark says:

    Folks, it isn’t that hard.

    Fiscally, pay off the highest interest anything as quick as possible and you will wind up paying the least out of your pocket.

    Emotionally, it will probably feel really good if you can fully pay one off and get something in the mail saying zero balance, do not pay.

    I’m happy to say I’ve never been in the situation of having balances on multiple cards but it could happen to anyone.

  10. Chongo says:

    ISn’t it worth it to find a method that works better for yourself? Ormans method might technically be better on my budget, but I know myself and it seems that king Ramseys’ method just works better with my brain… I keep seeing my balance go down by such a large amount that it makes me happy. With all the crap I’ve been going through with my health I’d rather be happy right now then be saving 20 bucks here and there.

  11. complexicated says:

    Ramsey is the best plan. Math wise Ormans wins out.. but personal finance is not about math (or else you wouldnt be in credit card debt :)) its about behavior. Dave Ramsey’s plan offers the best way to correct your behavior. I tried Ormans for a while and got right back into debt.. with Dave I am sitting pretty.. So ignore the math and get out debt you really save that much more anyway!!!

  12. dariaclone says:

    And while we are correcting the spelling of names, can we add Dave Ramsey to the list? (And fix the tag, too.)

    P.S. Orman’s been all over the news today, including your sister blog. You could have checked Gawker for the correct spelling:

  13. twigg says:

    Don’t overlook the obvious: a smalller balance on a high interest card could cost you less per month than a higher balance on a low interest card. Just do the math and see what’s really best for you, as each case is unique. If you have the luxury, transfer all that you can to the low interest card(s).

    Or, do what I did: go to your bank or credit union and get a consolidation loan. But doing this successfully has two benefits: it will cost you less per month if the loan rate is lower than your card rate and it will free up credit which will lead to an improving credit score. Which equals better rates moving forward. Of course, this is only good advice if you can avoid putting more money on the cards you pay off with the loan.

  14. Amry says:

    Hard numbers aside, from a psychological standpoint, if you’re trying to get out from under crippling debt the snowball method wins hands down every time. I’ve spent the past year using it to finally get out from under the shadow of debt that’s followed me throughout my 20s, and each time I’ve paid an individual account or loan off it’s felt amazing.

    The emotional benefits shouldn’t be overlooked here; I’d assume most who have a lot of debt to pay off could stand to have a healthy psychological lift.

  15. sblowes says:

    The WHOLE point is the emotional/psychological aspect of finances. Yes, of course there are cold, hard numbers (interest rates, minimum payments, etc). But if cold, hard numbers really had ANYTHING to do with how we handle finances we wouldn’t be in this credit card debt in the first place. Just watch “Deal or No Deal” to see how stupidly emotional we are about money. $270,000… NO DEAL!

    The best pay-off method is the one that you can EMOTIONALLY buy in to. If you set up a strict regime, with no end in sight, you will get tired of trying and give up.

    Just so you know, this principle applies to diet as well. If you starve yourself of (carbs, fat, sugar, etc, whatever…) and if it just makes you miserable you WILL give up.

    Any of these systems and methods MUST involve emotional reward. We got fat and in debt in the first place so we could satisfy ourselves emotionally. The way to get skinny and financially stable is through rewarding self-discipline. The high you get from running a 5k. The iPod shuffle you get as your reward for paying off the first credit card.

    I believe we VASTLY underestimate the emotional aspect. VASTLY.

  16. valel says:

    I prefer the “snowball” technique.

  17. swvaboy says:

    I am almost afraid to post; I am scared I will misspell something.

    I agree with Amry, it feels great when you pay off a card or loan in full. You get the pleasure of cutting the card up or getting the loan paper stamped “Paid in Full”. It is a great emotional booster.

    So that is the method I used and it worked. No debt.

  18. gcrash says:

    Pure math, Orman’s method is the best for reducing the additional interest each month while paying down the debts. The less monthly interest paid, the more that can go towards paying the balances. I guess I’m suprised there is a bebate between math or math+emotion.

    If the emotional part is important, pay off the card you hate the most, because if they aren’t collecting interest, they don’t make money from you >> meaning you screw the company you hate the most. Get that Visa Vendetta and MasterCard Massacre feeling out of your system, pay off and stick the company you hate the most.

  19. Keep talking...I'm listening says:

    As mentioned before, the Orman method is the mathematically superior method. Unfortunately a large, very large majority of people will never follow through to completion. That’s the value of the snowball method…it factors in the psychological element that people are after instant gratification (which is probably the reason that they have the credit card debt too!).

  20. codegrl says:

    I’ve been throwing money at our credit cards, which we had to use to live while my husband was laid off. My plan doesn’t involve complicated algebra or anything. I pay the ones that I can completely pay off that have the highest minimum payment. THEN, I take those minimum payments and throw them at the higher balances on the cards with higher rates. I’m not going to sit down and go through what I’ve paid, how much to add to the minimum divide by pi and dance on my head. I agree about the psychological factors…when you can start to see the light at the end of the tunnel, it makes you work that much harder.
    My method: Throw ALL extra money to your CCs..and DO NOT USE THEM!!!

  21. Triteon says:

    @branded: Take it somewhere else. The thread is about use (abuse) of credit.
    I’ve been out of work since early December and have found this to be the best way to pay down debt:
    Oh wait, I’m not in debt. I’m able to live off my interest-earning savings rather than interest-charging debt.
    rachmanut, fine math!

  22. healthdog says:

    @rachmanut: I am in awe of your math skills. Damn.

  23. Mr. Gunn says:

    Hey, do whatever make you happy, but owing X at 29% costs you more than X at 9%, so matter what X is. This isn’t a matter of opinion.

    I’m appreciative of the effort, but if you’re in awe of their math skills for doing high-school algebra, I feel bad for you.

  24. We went through the Dave Ramsey program — got us debt free from of $31k in 25 months. The emotion of getting the little balances out of the way was really important to us.

    However, I am an engineer, I know math (hopefully). Getting rid of what is costing you the most — the highest interest rates — is going to, in theory, cost less. Which is better really depends on an individual’s situation. In my case, I looked at our debt payoff in both ways, snowball and interest rates. Time wise, it actually would have taken us a month longer to get out of debt by paying the high interest rates first.

    I wrote a spreadsheet (found here: that I think does a decent enough job of tracking things through either the snowball method of interest rates. I know it isn’t 100% accurate, but it’s close enough for me. Give it a shot.

  25. mad_oak says:


    I need to stop visiting those kinda websites.

  26. Type-E says:

    My method:

    1. List all credit card balances you have
    2. sort it anyway you like
    3. Pay it off in one shot.

  27. olegna says:

    The idea is to make sure the CC with the highest interest is also the one with the lowest balance owed. That should be the goal as you keep on keepin on (as you go, try to work on getting those interest rates down). Between the two, Dave Ramsey’s is better because the best thing to do is reduce the number of CCs with outstanding balances.

    One thing that helps people working through this mess is to keep in mind that, actually, when you’ve devoted yourself to climbing out of debt, and you stick to an effective plan and avoid late fees, the effect of paying off debt does indeed snowball in a similar fashion that it snowballed into debt int he first place, especially after you cross benchmarks of paying off a card.

    Plus the sooner you can cross those benchmarks, the faster you get that warm and fuzzy feeling of not having to write that check (or make that debit).

    With that said:

    Does anyone know the low-down on closing CC accounts that you’ve paid off? I heard that this adversely affects your credit score (WHY???). I’ve also heard that having too many cards adversely affects your credit score. Sounds like bullshit predatory double jeopardy to me, and one small reason in favor of promulgating a socialist revolution.

  28. olegna says:

    PS – I’d like to add something to the mathematics of paying off the highest interest rate first. I think this doesn’t factor in human error. The more cards you have the more likely you’ll get hit with a late fee on a given month. All it takes is one or two late fees to wipe out some negligible benefit to paying off a high interest rate/high balance card first.

    If you owe $10,000 on one card with a 29.99 rate and three cards with $1,000 to $2,000 apiece at, say 19.99/14.99/20.99 APRs, it’s difficult to justify focusing on that $10,000 balance first just because it has the highest APR. By focusing on the lowest balances first you’ll only have one outstanding CC in a matter of months. The other way around you would have to juggle four payments a month while paying of $10,000, thus increasing your chances of getting late fees (and APR increases on the other cards) and hurting your credit score.

  29. CustomersRevenge says:

    Always pay the dollars to the higher rate! It is like your dollars are getting a higher return in the form of less interest. Make sure you save enough to cover minimum payments so you don’t blow the contracts. Juggling multiple payments is not hard nowadays, just write 4 checks or post 4 online bill payments. Your payoff for this extra complexity is the different in interest rates for however long it would have taken you to pay:

    Example: You can pay $500 on a 29% card or on a 14% card. If you pay on the 14% card so you can pay it off within 6 months then you’ve just cost yourself about $35 [(29-15) 15% on $500 for 6 months].

    The real key first step is to first CUT UP YOUR CARDS!

    I must admit that card companies make even financial geniuses screw up by being a bit dirty with their offers.

  30. thrillhouse says:


    Bravo! Exactly right, its about psychological victories. Dave himself will tell you that going after the highest interest rate will save you money, if you can stick with it. He will also tell you that personal finance is 80% personal and 20% finance. At this point in your finances its not about doing math – if you were doing math, you wouldn’t have debt, high or low interest rate.

    Dave likens this situation to weight loss. You need quick victories for positive reinforcement. If you go on a diet and lose 3lbs the first week, and 5 the next, and 5 the next, then you’ll be more likely to stick with it since you can see progress. Thats why his method and overall program works, period. Suze has lots of nice theories. Dave has results. Its more personal than it is finance, so put your calculators away.

    And yes, Dave’s Financial Peace plan worked for me, too. $40,000 payed off in 20 months. His plan works because not only has he done it himself, but he’s perfected it over the last 15+ years and counciled thousands upon thousands of families on this topic, in person and on the radio.

  31. x23 says:

    how about this advice?

  32. crown victor victoria - no star, no problem says:


    Here’s a better method than the two mentioned above: develop some self-control/discipline and live within your means.

    That is a lovely horse you have there. It’s very high.

    The fact is that people reading these comments and this story might actually benefit from the advice. I don’t think it’s helping to chastize people for having debt, unless you’re trying to shame America into fiscal responsibility. We’re not all like you, with 850 credit scores and huge steamer trunks full of cash.

    Then again, this is the internet, and you might have more debt than anyone here.

  33. @Tyler: There’s nothing wrong with suggesting that people need self control and to live within their means. It’s the difference between “Well, I’m goin to be close on my rent and car insurance this month, so I’ll make dinner at home” and “Well, I’m going to be close on my rent and car insurance this month, but fuck it, we’ll go out, that’s what credit cards are for. Yes people will benefit from the things posted with this article, but the underlying lesson here is that if you don’t create a situation like this for yourself, you don’t have to bail yourself out of it. Granted, there are times when a job is lost or there are emergencies when it’s very easy for people who do live within their means to get in the hole, but a lot of people with a lot of debt have that debt because they’ve got no sense of fiscal responsibility.

  34. olegna says:

    Comment #1: I agree that anonymous morons bragging about no debt is really dumb because they don’t even get credit for being so wonderful, since they’re anonymous. Going into CC debt is stupid, and very easy in a country that favors and rewards corporate irresponsibility over personal responsibility, and treated corporations as “entities” (with rights like people).

    Comment #2:

    I stand by my advice. If you owe $1,000 on a CC with 15% and $10,000 on a CC with 30% — pay off the $1,000 debt first. Otherwise you have that $1,000 debt on a separate account for a much longer period of time, greatly increasing your chances of getting hit with a late fees. It’s stupid to whittle away $10,000 first before resolving that $1,000 you owe just because of a nominal benefit in the math of compounding interest disregarding human error and, as Dave Ramsey said, the psychological benefit of eliminating the debt of one card and bing able to write one less check.

    Again: your goal should be to ensure the card you focus on has BOTH the lowest balance and the highest APR.

    PS – I paid off $28,000 in 20 months, but like everyone else here that says stuff like that: I was able to do it because my income increased when I changed jobs and started getting better pay. That’s the thing people rarely mention when they say “oh, I paid $50,000 off in two years!” They don’t say they did it as a burger flipper at McDonald’s.

  35. thrillhouse says:

    You’ve hit the nail on the head here. Irrespective of how one got into debt, the fact is that you now need to climb out of that hole. Dave’s plan is a great method of doing so. The analysis here – comparing to methods of snowballing debt – while moot in my opinion, is just one piece of the puzzle. Self-control, as suggested by jendomme is another piece.

    Most financial pundits get too caught up in the math and formulas and don’t understand that without behavior change, its all worthless. Thats why Dave’s plan works so well – its about working thru the math and changing your habits.

  36. thrillhouse says:


    Thats a good point, olegna. During our snowball, our income did go up significantly. BUT, there was a valley before the peak. In the middle of the plan, we went down to one income for a while. then for about 6 months, it was one steady income and one self-employed income. Yes, from beginning to end, our income went up by 25%, but at one point it had gone down 40%. We only survived it because we had changed our habits and gotten on a plan. But as you saw, when you handle your money properly, the Lord will bless you with more of it.

  37. GenXCub says:

    I hope someone is going through some of the above comments and culling them from the collective herd. As a frequent poster on the World of Warcraft forums, I observe that there are far too many people who get off on telling people how wrong they are, and how what they do is incredibly superior (aka L2P, or Learn to Play). I’m seeing the same above on a blog that is supposed to be helping people, not for others to demonstrate how big their debt to savings e-peen prowess is.

  38. synergy says:

    I’ve used the Orman method. I owed about $15,000 and I’m down to $4,000 in 5 years on a very low income. Actually that $4,000 would’ve been paid off two years ago, but I bought a car. So let’s say paying off $15,000 in credit card debt in 3 years on a salary few to no one in New York could live on.

  39. katana. says:

    Agreed. Lets start the culling by first demonstrating our World of Warcraft prowess to determine a Consumerist commenter hierarchy.

  40. crown victor victoria - no star, no problem says:


    …if you don’t create a situation like this for yourself, you don’t have to bail yourself out of it.

    I’m not disagreeting with you, because yes, the best way to avoid debt problems is to avoid debt, but the point of this is to help people that currently have debt. I can always make sure that I have both of my hands if I don’t cut one of them off, too. If people have no self control, I don’t think it’s the responsibility of Consumerist commenters to right that ship. That’s a much bigger issue, and I’d guess it happens to be tied to debt in a lot of cases. The “control your urges, you ass” angle is just not all that helpful. It’s the same as people posting “buy a mac, windows sucks!” in a thread about Vista upgrade problems.

    This post was about helping people get out of a financial hole which they (obviously) dug for themselves, I just wanted to keep it on the right track.

  41. Eugene says:

    Why is it called “David Ramsey’s Snowball Method” when that method existed before he named it? Why does he get credit for it?
    Neither method is right or wrong, each person with the debt needs to look at each and decide which will be best to get rid of first.

  42. frogpelt says:

    The reason Dave Ramsey’s teaches the snowball method is because it builds momentum. If you start out paying of small debts it helps you psychologically to see that you can actually get out of debt.

    With Orman’s method, the highest interest rate card could also have the highest balance and it could be a long time before you ever actually get rid of the debt.

    Ramsey’s methods are as much about spending behavior and psychology as they are about the math involved.

  43. AlexPittsburgh says:

    I used a mixed method. First I “paid off” credit cards by consolidating them to a 0% interest cards for six month. This would be the SnowBall method. I did this to make things easier for me to track (plus the 0% was icing on the cake when I got approved)

    Then I planned to pay each off within my budget, putting more toward the CC with the greater balance. The Ormon method. I decided the amount based on percentage of total debt. The more I owed a creditcard, the higher percentage of my budget it would get.

  44. mike says:

    Late comment; I apologize!

    I would caution not saving while you’re paying of credit card debt. If you have an emergancy, you’re stuck paying with a credit card again.

    I use the Crown Financial Roadmap (Christian based). Their method is to pay yourself first, while still paying as much of the credit cards as you can. Once you build up to $1000 in savings, start the “snowball” with the balance with the highest interest.

    Lather, rinse, repeat.

  45. Anonymous says:

    Paying off credit card debt isn’t nearly as difficult as people make it out to be. Just pick a card, any card, and start paying it off. If you want to save money in the process, start paying the highest interest rate card first because starting with the highest interest rate debt first always takes less time and saves more money in interest.

    Who says you can’t change the plan? If you get disheartened because it’s taking too long. Stop where you are, pay something off quickly and resume.

  46. edosan says:

    You forgot the most important step: never post about your credit card problems on Consumerist or you’ll incur the wrath of the self-righteous “I’ve never used a credit card in my life” brigade.