Carrying credit card debt isn’t uncommon for Americans, according to a recent report by ValuePenguin, Inc 38.1% of Americans carry some credit card balance. When it comes to paying off credit card debt, one recurrent question is how to pay it off the faster. Every household has their unique financial situation and personal goal, so there is not one particular strategy that works best.
Evaluating your financial situation and determining what your hopes and dreams are. Once you have figured out what goal you are aiming for is, then you will be up to come up with the best strategy to be the debt off the fastest.
Pay Down the Credit Card With the Highest Interest
Card statements are required to have the interest, finance charges and the monthly charges. The first step would be to gather all your monthly card statements and compare the interest rates and finance charge. Determine which card has the highest rate and start with paying that one down first. You will want to make sure you budget an amount greater than the minimum monthly payment. An important factor in paying down the cards faster is sticking with the higher amount. If you choose to pay $200 a month, make sure you pay that even when the minimum payment goes down.
Pay the Card With the Lowest Balance First
If you are a person who does well with checking items off a list, this option may be beneficial for you. For some, it is easier to stomach paying a card with a $600 over the card with the $2600 balance. By choosing this strategy and paying more than the minimum balance you will see results quicker. Paying the lowest balance first is a great option if you need to see light at the end of the tunnel faster.
Consolidation of Credit Card Debt
As mentioned earlier each situation is different, and there is no right or wrong way. Many consumers have multiple cards with a significant amount of debt, and their credit card debt can quickly spiral out of control; Americans are tempted at just about every store to sign up for savings. If you have signed up for many different accounts and racked up a significant amount of debt consolidating them may be an option for you. Obtaining a consolidation loan from your bank or credit union to pay off the balances and leave you with just one monthly payment and less interest.If your budget allows you to pay more than the monthly payment it is wise to do so.
Don’t Forget How You Ended Up in Debt
Credit cards are an essential factor in building your credit score, however making sure you use them correctly is key. Keep in mind how you got into debt in the first place and always remember what your goal is. If your goal is to buy your own house, or a new car, post a picture somewhere where you will see it daily.