Debt elimination strategies for physicians

By Naveed Saleh, MD, MS | Fact-checked by Barbara Bekiesz
Published June 6, 2022

Key Takeaways

  • Credit card debt is common among physicians. It typically starts accumulating upon graduation from medical school.

  • Banks charge interest on outstanding credit card balances in the form of annualized percentage rates (APRs). The average APR is about 16%, but this can vary based on a borrower’s credit score and history.

  • Debt avalanche and debt snowball are accelerated strategies to pay off debt. Refinancing and balance transfers are other options to consider.

Many young physicians are straddled with non-mortgage debt, according to the American Association of Medical Colleges (AAMC).[]

In total, 18% of newly minted doctors carry four types of non-mortgage debt: credit card, car loan, residency relocation, and “other.” On average, this debt adds up to $10,000, with $5,000 of it on credit cards.

A harsh reality for many young physicians, credit card debt is insidious and can creep up on anybody.

Results from the Medscape Cardiologist Wealth & Debt Report found that 17% of cardiologists surveyed grappled with credit card debt.[] Moreover, 42% of cardiologists reported having five or more credit cards, whereas the average American has four.

The danger of APRs

Money borrowed on credit cards accrues additional costs in the form of interest or an annual percentage rate (APR). Even though APR is an annual rate, banks calculate (and exact) interest on a monthly basis.

The APR is calculated based on the US Prime Rate, which was 3.5% in March 2022, plus the bank’s margin of 10% or more based on factors including one’s credit score.[] In other words, a borrower with good credit may have a credit card with an APR of about 13.5%.

Borrowers with poor credit are considered riskier by banks, and the APR in these situations could approach 23.5%. Factors that go into individual APR calculations include payment history, credit report, and debt-to-income ratio.

For those who pay credit card balances on time, APR becomes a moot point.

If you tend to carry a balance from month to month, however, APR can take a toll. According to the Federal Reserve, the average APR for credit cards is 16.17%.

Debt avalanche vs debt snowball

Debt avalanche and debt snowball are two types of accelerated debt repayment plans. For both, you list all of the credit card debts you owe, as well as their associated APRs.

With debt avalanche, you use any extra funds to pay off the card with the highest APR first. Once you pay off this card’s balance, you pay off the debt with the next highest APR.

With debt snowball, you pay off the smallest credit card debt first and continue to pay them off by order of amount due, lowest to highest.

“The debt avalanche method is the best strategy to save money and time, but it does have its downsides,” according to Investopedia.[]“It mainly requires discipline—to put all your extra allocated money into paying off a particular debt, not just the minimum."

"The debt avalanche will not work as effectively if you lose motivation and skip a month or two of strategic repayments."

Ashley Eneriz, Investopedia

If interested, there are various debt-reduction apps to keep you on track, including Tally and


Another good option for reducing credit debt is refinancing, which lowers your interest rates and decreases monthly payments. Refinancing options can entail a personal loan with interest rates lower than that of your credit card.

This is a particularly good idea if you have multiple credit cards. Certain financial institutions offer special financing to physicians, replete with lower interest rates.[]

Balance transfer

If you have only one credit card that’s accruing interest, a balance transfer may suit your needs.

This stopgap measure involves applying for a new card with a low introductory rate, transferring the balance from your current, higher-APR card, and then paying off the balance.[]

What this means for you

It’s tough to get ahead financially when you’re faced with mounting credit card debt. Fortunately, there are tried-and-true strategies that can help you reduce this debt and emancipate yourself financially. These strategies, however, require motivation and persistence.

Related: Half of physicians under 50 still have student loan debt, survey finds
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