5 Steps to Wrangle Your Debt Faster With the Debt Lasso Method

A woman creates a lasso while standing on a horse.
Getty Images

Ready to wrangle in that credit card debt?

If the debt avalanche and snowball methods leave you feeling a bit cold when you think of all the interest you’ll end up paying, consider the debt lasso method.

Developed by David Auten and John Schneider, the Debt Lasso method involves corralling your high-interest debt into a low-interest one so you can pay down the principal balance more quickly — and for less money.

Want to learn more? Auten and Schneider told us all about the debt lasso, including who it can help the most — and who shouldn’t use it.

What Is the Debt Lasso Method?

If you’ve read about other debt payoff methods, you might be wondering if the lasso method is just a balance transfer. Auten and Schneider get that question a lot.

“The reality is that a central piece of the process is doing some sort of consolidation — whether that’s a balance transfer to a zero-interest credit card or a low-interest loan,” Auten said. “But a lot of people forget those first two pieces and the last two pieces.”

We’ll look at all the pieces, but let’s first decide if the debt lasso method can help you.

Who Should Use the Debt Lasso?

To determine if the debt lasso method is right for you, start by adding up how much you owe in credit card debt. Then compare that total debt to your annual income. If your debt is less than half of your income, the debt lasso method could work for you.

So if you have $15,000 in credit card debt and your gross income (before taxes and other deductions are taken out) is $30,000, you’re a good candidate for the debt lasso. But if you have $65,000 in credit card debt with the same salary, you may want to seek other assistance to help you pay off your credit card debt.

You also might not benefit from taking up the lasso if you can realistically pay off your credit card debt in six months, since the associated fees (typically 3% to 5% of the amount being transferred) could cost you more than you’d save by taking advantage of a lower interest rate.

But if you fall somewhere in between, the lasso could help you pay off debt in a shorter amount of time and with less interest.

How the Debt Lasso Method Works

This portrait shows a gay couple sitting on a couch together in the mountains after being married.
Developed by David Auten, left, and John Schneider, the married couple known as the Debt Free Guys, the debt lasso method involves corralling your high-interest debt into a low-interest one so you can pay down the principal balance more quickly. Photo courtesy of Studio Lemus

Ready to ride off into the debt-free sunset? Whoa there, pard’ner. Remember: You have to follow each step.

1. Commit

You cannot successfully use the debt lasso method unless you’re willing to commit.

Auten and Schneider should know: They started their own debt lasso journey with $51,000 in credit card debt. After years of poor financial choices, the couple was sitting on the floor of their basement apartment when they realized that their debt would never allow them to buy a house or enjoy life the way their friends were.

“That was our particular rock-bottom moment, realizing that here we were in this financial and literal hole,” Schneider said.

So they made a two-part commitment — which you’ll also need to do if you want to use the debt lasso method:

  1. Stop using your credit cards. No exceptions.

  2. Decide on an amount greater than your total minimum monthly payments that you can reliably put toward your debt every month.

Committing to the process is essential, Auten and Schneider said, as it will help you later when you may be tempted to stray off course.

2. Trim

Start with the easy wins by paying off any credit cards that have low enough balances to knock out in less than six months.

The early victory not only offers a psychological benefit but also helps your credit score.

Maintaining those credit lines will decrease your credit utilization, which accounts for approximately 30% of your credit score. And the higher your credit score, the better position you’ll be in when you’re ready to lasso.

3. Lasso

Time to saddle up.

If you have a good or excellent credit score, finding a zero-interest — aka 0% intro APR — offer where you can transfer your highest interest credit card debt should be your goal.

We found the best 0% APR credit cards.

But if you have a less-than-stellar credit score, those offers may be tough to come by. Don’t give up.

You can still benefit from the lasso method by negotiating a lower interest rate with your current credit card company or transferring the balance to a card with a substantially lower interest rate than what you’re currently paying.

“To get you from 20% to 25% down to a 9% to 15% — that’s a great first step,” Schneider said.

And don’t limit yourself to credit card offers. Using a personal loan to pay off multiple cards has the same effect.

Compared to the average rate on credit cards, which was 18.43% as of August 2022, personal loans offered a better deal at 10.16%, according to the Federal Reserve.

Whichever offer you take, transfer or pay off as many balances as you can using your lower interest rate.

If you still have additional higher interest balances, prioritize paying off the credit card with the highest interest rate first.

Each time you pay off one credit card, put your money toward paying off the next highest balance.

Remember that you’ve committed to not using your credit cards (see Step #1). So hold onto the ones you’ve paid off. Why?

By not canceling the credit card, you’ll have more available credit, thus helping improve your credit score. And a higher credit score will help you get approved for another zero-interest credit card.

4. Automate

Automating your minimum monthly payments for all but your lassoed credit card will allow you to focus on paying off one debt at a time. But automating your payments can do even more to help.

Remember how we talked about the importance of committing because of later temptations? Here’s where that comes into play.

You may have multiple credit cards, but we’ll keep the example simple with one card: When you began your debt lasso journey, your minimum monthly payment was $80, so you committed to paying $200 on your credit card — $120 extra each month.

After you’ve paid down a portion of your balance, your credit card company tells you that your new minimum payment is only $60. Yay! But that doesn’t mean you now have $20 to spend — you should continue paying $200 each month, sending even more money toward your principal balance.

By automating your payments, you’ll be less tempted to reduce the amount when your minimum payment goes down — sort of an out-of-sight-out-of-mind mentality.

Putting all of the extra money toward your card with the highest interest rate will help you pay the least amount of interest over time. And that’s where the last step becomes crucial.

5. Monitor

This woman monitors her accounts online.
Getty Images

This is no time to put your debt payment strategy out to pasture. Monitoring your accounts is an important last step, as those credit card rates can run wild if left unattended.

Before you reach the end of a zero-interest period, start looking for other offers that allow you to transfer your balance so you can avoid getting socked with the new higher interest rate on your old card.

Although opening new accounts could temporarily hurt your credit score, Auten and Schneider emphasized that the long-term benefits of paying off debt faster can help counteract that effect.

Who Should NOT Use the Debt Lasso Method — For Now

A word of warning: If you’re in an industry where you could be furloughed or laid off suddenly, you should probably hold your horses — and your cash.

“If you do get an offer and then you end up not being able to make your payments, then you could get stuck with an interest rate that’s 25 to 30%,” Auten said.

Credit card agreements often include a clause in the fine print that allows them to raise your interest rates if you miss a payment during the zero-interest offer period. Some will even sneak in the right to recoup any money you saved previously during the promotional period at the new interest rate.

The takeaway lesson: Read the fine print.

Saving your cash for now will let you build an emergency fund in case you do lose income. And if it turns out that you end up with an extra nest egg, consider it a bonus payment as you return to the debt lasso method.


Tiffany Wendeln Connors is the deputy editor at The Penny Hoarder who is fully committed to corny puns. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.