Learn more about the best practices for paying credit card debt
Facing credit card debt can feel overwhelming. If you are like most Americans, you hold at least some balance on your credit card. Too much debt and high-interest rates makes it difficult to get caught up. You may feel you are spinning your wheels in an endless debt cycle.
We want to help you overcome this obstacle so you can move forward in life and pursue your dreams. Paying down credit card debt won’t magically happen overnight. But with dedication, patience, and some key strategies, you can accomplish this sooner than you think. Below, you will find some best practices for paying your credit card debt.
Choose a Payment Strategy
There are two primary strategies for tackling credit card debt. Consider your unique situation and card balances. Then choose one of the two strategies below and stick with it:
Pay Off Lowest Balances
Using this strategy will provide more immediate and noticeable gratification. When you tackle the card (or cards) with the lowest balance, you will notice the debt reduction immediately. By knocking out the smaller debts you owe, you see them fall off the books. This, overall, decreases immediate pressure and can help create a snowball effect.
Pay Off the Highest APR
Going this route will ultimately save you money. By addressing the balance with the highest annual percentage rate (APR), you reduce the overall amount of interest owed and pay less money to remove your debt. You can then put that savings into paying off the next card.
Create a Budget
Yes, the dreaded “b” word. To get a handle on your financial situation, honestly assess your spending habits. You may need to give up or just decrease indulgent expenses for a while, but in the end, the sacrifice will be worth it.
Pay More Than the Minimum
When building your budget, see what expenditures you can move around to pay more than the minimum due each month. Not only will it save you additional money in interest, but you will also be able to pay down the debt sooner and increase your credit score. Win, win!
Having debt can be a huge obstacle toward qualifying for a mortgage, but we can help you discuss getting a handle on it while looking for your new home. If you’re looking to buy a new home in Northern Colorado, contact Dennis Schick today!
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