Credit card debt accounts for about a quarter of all U.S. personal debt. If you’re struggling to pay off your credit cards, know that you’re not alone. While credit is a great tool to finance large purchases, it can rack up easily. Unfortunately, credit card companies make it all too easy to open multiple accounts and end up owing more money.
Read more to find out the best way to pay off multiple credit cards. Also, be sure to check the https://www.sofi.com/credit-card/ website to get further information. We’ve compared the three best options so you can get organized and create a debt plan today.
1. The Avalanche Method
The avalanche method of paying off debt prioritizes your credit cards with the highest interest. With this method, you’re saving the most money in the long run by paying off credit loans that may tack on 25-35% interest.
Many financial experts say the avalanche method is the smartest since it’s helping keep more money in your pocket. Yet, it could be the most overwhelming if your high-interest cards also have the highest balance.
To use the avalanche method, list all your credit cards and organize them by interest rate. Work to set aside money each month that’s above the minimum payment for your highest-interest card. Once that one’s paid off, roll the same amount of money into payments for the next card on the list and so forth.
2. The Snowball Method
The snowball method works similarly to the avalanche method to pay off multiple credit cards. The difference with the snowball method is that you’re prioritizing your cards by loan amount instead of the interest rate. The snowball method works great for people who are very overwhelmed by their debt and need to start small.
The snowball method works psychologically by giving you a sense of accomplishment every time you pay off a card. You’ll start with the card that has the smallest balance and work up from there. Each time you move to a new card, you should already have money set aside from payments you were making on the previous card.
The only downside to this method is that you might still be paying high-interest rates on your other cards.
3. Consolidate Your Debt
Another great method toward paying off debt is consolidating your payments. The details behind consolidating your debt include asking for a personal loan to pay off credit cards or transferring your balances to a single line of credit. The idea behind debt consolidation is that you’ll have a single loan payoff rather than worrying about multiple credit cards.
Consolidating your debt makes it easier to manage, and it can also save you money in the long run. When consolidating your debt, look for personal loans with low-interest rates or transferring your balance to a low-interest credit card.
How to Choose the Best Way to Pay off Multiple Credit Cards
The best way to pay off multiple credit cards will be very personal. Paying off debt won’t always be easy, but it should help you feel less overwhelmed. At the end of the day, choose a plan that makes your debt easier to manage.
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