Dave Ramsey Says If You're Only Making Minimum Payments, You're Doing It Wrong

A minimum credit card payment is the lowest amount you can pay to the card company without being considered delinquent. As such, it's designed to mostly cover interest and doesn't go to very much of your original debt.

Dave Ramsey's financial philosophy is that debt keeps you from building wealth, so he has strong opinions about how much you should pay on your credit cards or loans. (Hint: It's not the minimum.) Here's his full take on how you can work to get out of debt, even if you're not earning as much as you'd like.

Ramsey's take on paying only the minimum

The esteemed money guru has a core belief around personal finance. He says it's 80% behavior and 20% head knowledge. Ramsey also emphasizes habits and mindset practices over simply calculating your income and expenses each month.

In a recent Facebook video, he shares his standard advice to someone who has made some decisions at a painful time in their life. He doesn't want them to fixate on what they've done and that they haven't failed. But he does want them to avoid only paying the minimums, as it drags out debt and costs thousands in interest over time.

While we don't hear the full story in all of his social media posts, his advice typically centers around the snowball method, which is to pay off the smallest debt account first, even if it doesn't have the most expensive interest rate. He suggests this as a motivating approach to knocking out full debt balances so you can really feel the progress and move on to more accounts soon after.

The math on minimum payments

When you do the math on minimum payments, Ramsey's approach to pay much more checks out. Because lenders charge an Annual Percentage Rate (APR), which is converted to a daily rate and applied to your average daily balance, each day you don't pay more than the minimum can cost you. What you do pay goes mostly to interest and not to the item you originally bought with the credit card.

For example, if you have a $3,000 balance at 18% APR, making only the minimum payment would take you around 22 years and cost you over $6,000 in interest — almost twice what you originally borrowed. Even paying $10-20 more a month can cut the payoff time significantly, as well as the total amount you pay in interest to the bank.

This is a concrete example of how just a tiny bit more can have a big impact on your finances.

Practical ways to pay more when money is tight

So, the math and Ramsey tell us to tackle debt more aggressively, and that may be easier to do when you have extra cash at the end of every month. But what can you do when you're already feeling the pinch of the economy?

Some strategies that have worked for others include adjusting the budget to focus more on debt, cutting expenses, and earning additional income.

Try a 30-day spending scrub

If you're not tracking every expense to the penny, start here. Then, target three categories for further reduction. Whether it's curbing that Amazon ordering or skipping the GrubHub, there's likely at least $10-20 you can find to put toward those credit cards.

Repeat each month, adjusting the categories as needed to reflect the most savings.

Negotiate down expenses

You can also ask for lower bills for your cell phone, cable, or streaming subscriptions. Did you know that when you try to cancel a streaming service, you'll be given 50% off or more to stay on? While you can't do this every month, even a temporary cut can make a difference.

Some companies (like your cable) won't require you to threaten cancellation. They may give you a discount just by asking, especially if you're a long-time customer.

Boost earnings

Ramsey also recommends that most of his callers look for ways to earn more income. It's often hard to cut down more when you've already minimized. Getting a part-time job or side gig can be a truly life-changing approach.

This may also be a good time to ask for a raise at work, if you're due for one, or look into promotions or higher-paying opportunities at the same company.

Automate more than the minimum

When you do free up some cash in the budget for debt, assign it to your "more than the minimum" strategy right away. Revisit your automatic credit card payments, adjusting them to account for your extra cash. This way, you won't spend it on other things and can ensure it gets applied to your debt-busting efforts.

You'll also reduce the cognitive load of having to think about payments every month and won't risk accidentally paying late, incurring a fee, and undoing all your hard work. It's done for you and reflects that "intensity" mindset Ramsey's famous for promoting.

Bottom line

Ramsey's take is that paying only the minimum will be costly and could leave you trapped in debt for much longer than you should be. If you're looking to start investing, it's wise to prioritize debt first. The snowball method is one motivating strategy that has worked for Ramsey's fans.

This shows that success is as much about mindset as putting pen to paper with a budget. Consider using visual tools that help reinforce even your smallest wins. Whether you use a debt payoff tracker or celebrate paid accounts with a special home-cooked meal, the way out of debt is a slow but steady one that even those on a limited budget can accomplish.

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