If one of your resolutions for 2018 is to pay down or even pay off your credit card balances, you should know that experts say there's a way to do it that will help you optimize your payments and ultimately lessen the interest you accrue. Of course, interest is a significant amount of many people's credit card balances.
The first step is to determine how much money you have to devote to credit card payments. Then, calculate how much of that is needed to pay the minimum balance on each of your cards. Whatever money you have left over for credit card payments should be used to pay down the card with the highest interest rate. This may take some searching through the fine print on your credit card statement, but it will be worth it.
A recent study of credit card holders' payment behavior in England found that most people weren't focusing on paying down the card with the highest interest rate. In fact, only 10 percent were. Some simply split their payments evenly among their cards. Some paid the same percentage of each card's balance, whether it was $500 or $5,000. Others focused on paying down the cards with the largest balances.
While it can't be said for certain whether Americans' payment habits are the same as those of our British friends, a study conducted in Mexico showed similar results.
If your credit card debt has gotten to the point where you can't make your minimum payments, you're doing without necessities to keep up with your credit card payments or you're using one credit card to pay down another, it may be time to get some debt guidance from a New Jersey bankruptcy attorney.
Source: Washington Post, "Wonkblog Analysis Most people are paying off their credit card debt all wrong — are you?," Christopher Ingraham, Jan. 02, 2018