Utilizing science to pay down your debt faster

If you are working to reduce charge card debt, you have lots of choices to make. Depending on how several cards you’ve and the amount of charge card debt, maximizing your money can be tough. How you are paying down debt should be re-thought. At least, that is what the science says. Source of article – Pay down credit card debt – Using science to pay it down faster by MoneyBlogNewz.

All about how you can pay charge card debt down the best

Studies show a lot of people don’t make very good financial choices when it comes to paying off charge card debt. If given the option, many people pay down the charge card debt they can “get rid of” first, even if it has the lowest interest rate. Even if you are getting out of debt slower, several think that closing a loan or charge card will help you make a lot of progress. Instead, the card with the highest interest should be paid off first.

Data on credit card interest you should know about

When reducing debt, the interest on credit cards is the first thing that should be considered. You’ll end up paying more cash on cards with higher interest rates. The annual percentage rate is what the credit card company is charging you just for the privilege of owing money. You do not desire to keep higher interest rates. This is because the money compounds more meaning you will have more to pay. Do not repay the lower interest loans even if they might be smaller. Work on the higher interest rate loans.

Attempting to get the charge card debt paid down

Now that you know which credit card debt you should pay down first, how do you go about this?

1. List all your debts. Order them so you are paying the highest APR first. Make sure the interest is listed with them.
2. Find out how much money can be spent every paycheck on paying off credit card debt. Do this with a basic household budget that is easy to make if you don’t have one yet.
3. Don’t just make the minimum payment. You’ll really repay the debt instead of being stuck in it in case you are paying more than the minimum.
4. Find extra money to pay down your debt. You can make some extra cash by recycling. You may also get a part-time job to do this.
5. Leave your savings alone. While it might seem like an easy answer – borrow from your 401k or house – leaving yourself some breathing room for unpredicted expenditures is important, lest you end up having to use your credit cards and end up in debt all over again.

Data from

Marketplace

marketplace.publicradio.org/display/web/2009/09/14/pm-loans-q/