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Using the Snowball Method and the following debt, how much of the monthly $1,000 should be paid to Creditor #3?

Creditor #1: Balance = $10,000 / APR = 12% / Minimum Payment = $155

Creditor #2: Balance = $6,000 / APR = 18.99% / Minimum Payment = $65

Creditor #3: Balance = $2,000 / APR = 10% / Minimum Payment = $26

Respuesta :

In the snowball method, after making minimum payments on all debts, the debtor pays off the creditor with the lowest balance.
Start by deducting the minimum payments from the initial $1000:
1000 - (155 + 65 + 26) = 754

Pay the remaining $754 to the creditor with the lowest balance, which is creditor 3.

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