The Federal Reserve increased its key rate by another quarter of a point, recently. This increase brought the rate to the highest level in 15 years. The increase was made in an effort to stave off inflation by making borrowing more expensive. However, this fed rate increase will affect consumer’s credit card bills.
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4 Cost Effective Ways to Pay Down Credit Card Debt
Paying down credit card debt can seem like a never-ending struggle. As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees and penalties, and never-ending minimum payments that do not seem to make a dent in the total balance.
According to data from the New York Federal Reserve, the total national credit card debt being carried has hit $14.3 trillion, which represents a 1.1 percent increase from the previous quarter. One of the biggest problems’ consumers face when it comes to credit card debt is paying down a large balance or balances once they are incurred. However, certain tactics have been proven to be successful when it comes to paying off credit card debt.
‘Debt Crushing’ a Top Priority in 2020
Becoming debt-free is a popular resolution in the New Year. As people are coming off the holidays, they often have larger credit card bills coming due. Approximately 7 in 10 people have at least one credit card. More than half of the cardholders already in debt were willing to put gifts and holiday expenditures on credit cards, according to Creditcards.com.
Snowball or avalanche method
What is the best way to pay down debt?
The snowball method involves looking at all your debts and picking the one with the smallest balance. Ignore the interest rate and type of debt. Choose the smallest amount and put all your resources into paying that off. While doing so, keep up with the minimum payments on all your other debts. The theory is that aggressively attacking the smallest amount will allow the individual to see immediate results, which then kicks motivation into high gear.