A named rule from The Escape Fund

The Hurdle Rule

If you are carrying a card balance, paying it down is a guaranteed return equal to its APR. That is the bar. Anything else you do with the money has to clear it — measured on what you actually made, not what you hope to.

Your card’s APR

The purchase APR on your statement.

Balance you carry

The part you don’t clear each month.

Your realized return, last 12 months

Net. After fees, after losers, after tax.

You are below the bar by 14%.

The card costs $60.00 a month on $3,000. Clearing it is a guaranteed 24%, with no drawdowns and no bad quarters.

The bar: 24%
Costing you, per month: $60.00
Your 12 months: 10%
Gap: -14%

Note what the rule does not say. It does not say stop trading, and it does not say debt is a moral failure. It says there is a number to beat, the number is printed on your statement, and you can check whether you beat it. Most advice in this area skips straight to the instruction; this is the arithmetic underneath it.

The 10%-a-month check

The most common objection to this rule is some version of “my trading makes more than that.” Often it does. The check is simply what the claimed rate means if it holds.

A monthly return of

Starting from

That is 3.14× a year, every year.

$2,000 becomes $6,277 in one year, and $608,963 in five.

That is not a claim that it is impossible. It is a claim about what kind of thing it is: a rate that, sustained, makes you one of the best-performing traders alive. Worth measuring properly before you price the rest of your finances around it — which is all the rule asks.

What actually moves this number

Below the bar, paying the card down is the highest guaranteed return available to you. Not a consolation prize — 24%, certain, with no drawdowns. Very little else on this site pays that, and nothing pays it reliably.

Above the bar, the rule has told you something useful and gets out of the way. It is a floor for deciding where the next dollar goes, not a verdict on what you do with your money.

You can also lower the bar instead of clearing it. A balance transfer or a lower-APR card moves the number you have to beat, which is often easier than beating it. That is a real move with real terms attached, and it is worth checking before you conclude you are stuck.

If you carry no balance, this rule does not apply to you. There is no hurdle. Ignore it and move on.

If you clear the bar on twelve months, that is one sample, not an edge. The rule is a floor for deciding where money goes, not evidence about your trading. Twelve good months happen to plenty of people who are about to have twelve bad ones.

Keep one month of costs accessible before you throw everything at the balance. Paying a card to zero and then borrowing again at the same APR the first time something breaks is not progress. This caveat travels with every debt-payoff number on this site.

What this assumes

The bar is your card’s APR, treated as a guaranteed return — because not paying it is a certain cost, where an investment return is not a certain gain.
Monthly cost is APR ÷ 12 applied to the balance carried, which is how cards actually charge. The example card in the episode is $3,000 at 24% — $60.00 a month.
Your side of the comparison is realized net return over a completed twelve months: after fees, after losses, after tax. Open positions and paper gains are not returns.
The comparison is before tax on the card side. Card interest is not deductible for personal use, so the two sides are closer to like-for-like than they look.
Compounding in the check is monthly, with nothing withdrawn.

The full working behind the video, including every figure and its source, is on the receipts page for “The Money Advice That Keeps You Poor”.