What is the best method of paying off your credit card debt ? Is it paying off the credit card that has the highest interest rate on it or Paying off the credit card that has the smallest debt on it so that you can be relieved of one credit card debt completely more quickly?
Paying off the Credit Card with the Highest Interest Rate First
While there are two methods of paying off credit card bills the quickest method to pay off all your credit cards involves paying off the credit card with the highest interest rate first. You started deciding how much money you want to put towards paying off your credit card debt every month. Then you pay the minimum on all your credit cards and take the extra amount of money to pay off the balance on the credit card with the highest interest rate. Once you manage to pay off this credit card you’ve shifted attention to the credit cards that has the next highest rate of interest diverting all the money that you are paying on the trust credit card to the second credit card. So the money that you pay on the next credit card will be the total sum of money that you were paying on the first credit card loss the minimum payment that you are already making on it. In this way you go down the hierarchy of interest rate.
While this method is the fastest way to pay of all your credit card debts and save the maximum amount of money in interest and financial charges it may feel like it is the longer route to take.
Sometimes the credit card with the highest interest rate may also be the credit card with the highest amount of balance. This means that it made me quite a while before you finish paying off your first credit card completely.
This can result in making many people feel that it is a slow process. But actually it’s not. While dealing with a credit card that has a high interest rate as well as a high balance may take longer the process will quicken dramatically as you move down the hierarchy off high interest rate credit cards.
Credit Card Debt Snowball Method Of Paying off Your Credit Card Debt
Another popular method of paying off your credit cards is the credit card debt snowball method which involves paying off the credit card with the lowest balance. This method is usually a little is slower and involves a higher cost although it provides quicker results since you will be able to pay off a credit card with the lowest balance faster.