Choosing between Bigger and Smaller Credit Card Debt to Pay Back First

People take different approaches to making off debts. Since credit cards are the commonest kind of debts let us take that as an example in this column.

Some people decide to pay off the smallest debt first as that is the easiest. By continuing to meet the minimum payments on all the other debts getting one small debt completely out of the way gives them a boost of confidence and provides a feel good factor. It gives them the confidence that pain of all the debts is something that can be done. Other people decide to tackle the biggest debt on their record in order to avoid paying large sums of money as interest-free and financial charges.

Depending on your particular situation you can decide to take either approach. Paying the smallest debt first means that more and more of your obligations will get taken care of faster and as you work your way up from the smallest debt you will have more cash left over from the payments that you were making on the smaller debts to allocate to the subsequently larger ones. Paying off the largest debt first will ensure that you pay the least amount of money as interest and finance charges and thus save yourself some extra money in the long run. If some large debt is rarely bothering you then taking care of that will help to release a lot of stress.

The important thing is to take a close and honest look at your financial situation. Try to evaluate the reasons as to why you got yourself in so much debt in the first place. What you need to do is start paying of your debt rather than incurring further expenses on your credit. The problem needs to be taken care of at the root level so that you do not land yourself in the same place once again in the future. Get debt free and stay that way. Once all your debts are gone from a credit report and the negative information is removed your credit rating will automatically improve.