If you have excessive credit card debt on multiple cards, and you can afford more than just the minimum payment, then you should be aware of the following smart credit card payoff strategies to manage your credit card balances.
Of course, the ideal debt management strategy prioritizes a sound budget and routine credit maintenance. However, when you need to improve a poor credit situation, there are a number of options available to you.
First of all, you do not have to do this all by yourself. You could seek the help of a professional credit counselor. Of course, you might be concerned that one of these consultations could affect your credit score. Although this process is unlikely to directly affect your credit score, there are some indirect effects of which you should be aware.
At the beginning of many credit card debt consolidation programs, you may be tempted to close a number of credit cards to avoid additional debt. Doing so will lower your credit utilization ratio by minimizing the amount of your available credit. This ratio is important because it makes up roughly 30% of your credit score. Basically, the credit utilization ratio measures the amount of available credit that you are currently using.
Snowball vs Avalanche
CNBC breaks down these credit card payment strategies into two categories: the snowball method and the avalanche method. With the snowball technique, you pay off the lowest balances first before paying the larger amounts. By starting small and then progressively tackling larger balances, the task of eliminating enormous credit card debt becomes a series of smaller balances to focus on one after another.
Conversely, if you practice the avalanche method, you focus less on card balances and more on their interest rates. You’ll pay off the credit card with the highest interest rate first before paying off those with lower rates. Credit cards with higher rates are costing you more money per month than the others, so if you eliminate those high-interest payments, you could be able to pay off the entire amount of all the cards for less money.
Whether you decide to seek professional help or you choose to go it alone, you should start your credit recovery journey by doing your research. The financial website https://www.bills.com is a great place to learn more helpful strategies for consolidating your credit card debt. They can connect you via telephone to a certified professional as well as a plethora of debt resources. You can check out their blog, which provides a wide range of knowledge on subjects regarding debt and credit consolidation.
Companies like Freedom Debt Relief help all types of clients from those with around $1000 in debt to more serious cases in the six-figure range. Some additional services they provide include classes, scholarships, and finance-related news stories. Freedom Debt Relief also works with clients who only speak Spanish. They even offer free, no-risk credit card debt relief consultations. They have proven themselves to be a trusted debt consolidation firm with over 650,000 clients enrolled and over $10 billion in debt resolved.
Equipped with these smart credit card payoff strategies, you can begin your credit recovery journey with confidence. As stated before, the best way to deal with credit is to practice good maintenance before issues arise. However, credit card debt problems can be fixed with the right strategy. Before you decide which credit card debt relief strategy is right for you, do extensive research of your own, and a good place to start is the Freedom Debt Relief website. After you have taken some time and thought it over, then make your decision and stick with it.