As much as I hate to admit it, I’m human and have credit card debt that is constantly weighing in the back of my mind. Though many people experience credit card debt, it’s easy to get into but harder to get out of until I discovered the debt avalanche and debt snowball payoff methods.
These two approaches can help me pay off my credit card debt but before I commit to one method, there are things I need to consider in which method will work best with my financial situation. The highest priority in managing this financial conundrum is using credit cards responsibly.
The debt snowball payoff method works by paying off debt in order from the lowest balance to the highest balance (regardless of interest rates). It’s recommended for this method to make minimum payments on all credit cards except the one with the smallest balance and pay as much as I can on the card with the smallest balance until it’s paid off, then repeat with the next credit card with the smallest balance.
If I use the debt snowball payoff method, I can make the minimum payments required for all my credit cards while using any extra income to pay off my credit cards starting with the one with the smallest balance. This will be best for my plan because I need immediate results to stay motivated toward achieving the goal of paying off my debt.
The other method I am considering is the debt avalanche payoff method that is similar to the snowball method but instead focuses on the credit card debt in order of cards with the highest to lowest interest rates. By taking this route, I will be making minimum credit card payments except for the credit card with the highest interest rate.
By using the avalanche debt payoff method, I will be paying as much as I can on the credit card with the highest interest rate until it’s completely paid off. Once I’ve completely paid off the first card, I continue the process with the next credit card from the predetermined list. This method can work best for me by sticking with a long-term goal even without immediate results.
After learning about these methods of paying off credit card debt, I think my best option is the snowball method because it suits my lifestyle and provides attainable goals. Which method would you use to tackle credit card debt?