Credit card debt seems to be the bane of the American existence -- consumers are encouraged to buy, and it's considered a sign of a good economy when people are willing to load their credit cards with debts.
At the same time, living under all that debt can be a real struggle. One unexpected expense or a single missed paycheck can send your finances into a downward spiral you can't control. If you're trying to pay off your credit cards before something like that happens, experts recommend several different approaches:
1. First, make a budget. You can't pay extra on your debts until you know if you actually have anything extra. If you're barely holding onto the ability to make the minimum payments, you need to explore other options for reducing your debt.
2. Consider paying off your smallest loan first. While it may be financially more advisable in the long run to pay extra on the card with the highest interest rate, there's a psychological satisfaction to seeing one of those credit card payments disappear. That might be all the encouragement you need to believe it's actually possible to get out of debt.
3. Attack the high-interest cards next. Once you pay off that little credit card, take the payment you were making on it each month and throw it toward the card with the highest interest rate. The sooner you get that balance down, the more long-term savings you'll realize from the interest you were paying on that card.
4. Look at your other options. If you did your budget and realized that there simply isn't any possibility of paying any more than you're paying now, it may be time to take a different approach. All your money is being gobbled up in interest and fees, and you may have already paid more in interest than you borrowed in the first place.
If you're at that point, consider talking to an attorney who handles consumer credit card debt. You may be able to work out a payment plan with your creditors for less than you owe, go into debt consolidation or decide that bankruptcy is the better decision. All three methods will damage your credit in the immediate future but could put you on a more solid footing in the future faster than what you're doing now.
Source: Benzinga, "Paying Down Credit Card Debt Is Possible And National Debt Relief Provides Valuable Tips To Accomplish Just That," May 05, 2017