Credit card debt elimination can be achieved through many different strategies. Each option has its pros and cons for each person, especially because finances are a highly personal thing. Different variables might wind up impacting the choice that actually makes the most sense for you. When trying to take care of pesky credit card debt, there are two relatively broad approaches that have a tendency to be the most popular: the debt stacking and snowball methods.
Debt Stacking and How It Works
Credit card debt elimination through debt stacking involves taking account of all the debts you owe and organizing and prioritizing your payments. Most often, this means making a list of the debts you owe and tackling them based on which has the highest interest rate. This is effective because, in the long run, it cuts out a lot of the money that you would wind up paying back. Interest accounts for a lot of what you actually wind up paying for when you’re in debt, so going with a credit card debt elimination plan that starts with the highest interest rates first will help you save money in the long run.
The Snowball Method: Pros and Cons
Another method for credit card debt elimination involves what’s called “snowballing.” This is almost the opposite approach of debt stacking. You pay the minimum balance on all cards, except for the one with the lowest balance, which you aggressively tackle regardless of interest rate. Some also recommend that you keep applying that same amount towards your other debts as you work your way up.
From California to Rhode Island, debt settlement has a psychological purpose. It gives you a sense of victory and makes it easier for you to be enthusiastic and stay motivated as you go about making relatively difficult financial changes. The downside to debt snowballing is that you will often wind up paying back more money, because you’re ultimately dragging out the payment process longer by giving your debts more time to accrue interest (the stacking method eliminates this by taking care of debts with the highest interest rate first).
No matter what your choice may be, there are a ton of ways to go about eliminating your credit card debt. You can resolve the process on your own, or you can enlist the support and experience of a company committed to financial freedom, like Financial Solutions of America. No matter what your choice winds up being, financial security is a lot closer than you might think.