Credit Card Debt Strategies
Credit card debt has become increasingly commonplace, and while credit cards can be very useful, the debt that comes with it can be devastating. Most credit card interest rates come out around 15% but can certainly go higher to 20%. Anyone who has dealt with credit card debt knows that it’s not a pleasant experience and something that is both financially detrimental but also incredibly emotionally taxing. While paying off your credit cards every month is ideal, not everyone is able to so I wanted to discuss a few strategies as well as stress the importance of doing so.
Focus on High Interest Cards First-This one is known to most people, and is the most common way to tackle credit card debt, but because of how important getting out of this type of debt is to your financial plan, I’m going to restate it. Take a look at the interest rates of the cards you have, find the highest interest rate, and work to pay that one off before moving down the ladder, rung by rung. This allows you to eliminate the highest interest debt first and makes it easier to tackle the lower interest cards and climb out of the grasp of the credit card companies.
Focus on Lowest Balance First-This strategy is less efficient, but perhaps more effective for certain people. Those who have developed bad spending habits and use excessive retail therapy, may not be able to successfully tackle the highest interest cards without falling back into old habits. In that situation, it could be more useful to work on building better spending habits and being able to pay off cards quickly gives a satisfaction that you’re on the right path and taking positive steps. While this approach is less efficient, it could potentially be more effective for some people.
Obviously these are broad strategies and may not be applicable to each individual, but the important thing is that you work to get out of credit card debt as a first step to taking control of your finances. If you do have some credit card debt, I’d love to chat with you and figure out ways to get out from underneath it, just reach out!