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Weekly Tips

What's the Best Way to Pay Off Credit Card Debt?

If the only thing that matters to you when paying off debt is saving dollars and cents, the payment strategy that clearly makes the most financial sense is paying off your balance with the highest interest rate first.  So try this method out and start watching your balances shrink!

Start out by tripling your monthly payments on the card with the highest APR while continuing to make the minimum payments on the rest of your credit cards. When the balance reaches zero on the first credit card, do a little celebration jig, and then move on to the credit card with the next highest APR until you are eventually debt free.

Remember that while this strategy will save the most money in finance charges, it may not be the best way to improve your credit score in the short term. Since credit utilization is a very important component of your FICO score, you may be better off focusing on paying down your credit card with the highest utilization ratio if you want to give your credit scores a nice bump instead.

 

on Wed, 2016-03-16 14:50