Getting Out of Debt Using a Pyramid Method

By Heather Rutherford

  • Overview

    Getting out of debt using a pyramid method is one of the fastest ways to pay off high-interest debt. This method is the same method used by most debt consolidation groups. It allows a person to pay off a credit card within 2 to 6 years, depending on total debt owed, as opposed to the average 16 years it would take to pay off $2,000 of debt by paying the minimum monthly payment alone. The pyramid method works best with credit cards and small loans, but can be extended to mortgage payments as well.
    Getting Out of Debt Using a Pyramid Method
  • Preparation

  • Step 1

    Stop using credit cards, and do not apply for any loans until all debts are paid. Falling deeper into debt will eliminate the possibility of paying off the debt. To prevent the chances of gathering more debt, consider closing all credit card accounts.
  • Step 2

    Write down a list of all debts owed. Include a description of the debt, interest rate, minimum payment due, late payments due and total debt owed.
  • Step 3

    Prioritize the list to decide which debts need to be paid off soonest. Most people will choose either the debt with the highest interest rate or the debt with the highest minimum payment. Either choice boasts similar results in the end even though expert opinions will vary on the topic.
  • Step 4

    Save as much extra money as possible. Doing this may mean cutting out a few luxuries like soda, restaurants and entertainment. The more money saved means getting out of debt faster using a pyramid method.


  • Step 5

    Pay off all fees with the saved money so only the standard minimum payments are owed. Occasionally. late fees and over-limit fees can be eliminated by simply calling the company to which the debt is owed and explaining the situation.
  • The Pyramid Method

    • Step 1

      Continue to save the same amount of money as before the late payments and over-limit fees were paid.
    • Step 2

      Place the saved money toward the debt with the highest priority and pay only the minimum payments on the rest of the debts owed. The goal is to pay off the highest priority debt, in full, in the shortest time possible.
    • Step 3

      Pay off the highest priority debt. Then begin paying off the second highest priority debt with the saved money and the minimum payment that was being used for the first debt. For instance, if the first debt's minimum payment was $50 and the saved amount is $50, there is now $100 that will be paid toward the second debt in addition to the minimum payment of that debt. If the second debt boasts a minimum payment of $50, then the total payment will be $150.
    • Step 4

      Continue paying this higher-than-minimum payment toward the second debt until it is paid off. Now move onto the third and fourth debt in the same way. If $150 was paid monthly for the second debt, now pay $150 over the minimum payment of the third debt until it is paid. Continue in this pattern until all debt is gone.
    • Skill: Moderate
    • Ingredients:
    • 2 or more lines of debt
    • Tip: If adding mortgage debt to the pyramid method, simply place the mortgage payments last on the list of debts to be paid.
    • Tip: Before embarking on the pyramid method for getting out of debt, consider renegotiating all interest rates to a lower APR.

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