When deciding which credit card to pay off first, you generally have a few strategies to consider. Here are the two most popular methods:
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Avalanche Method: Focus on paying off the credit card with the highest interest rate first. This approach minimizes the amount of interest you pay over time. Once the card with the highest interest is paid off, you move on to the next highest rate, and so on.
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Snowball Method: This strategy involves paying off the smallest balance first, regardless of the interest rate. The idea is that paying off a smaller debt can provide a psychological boost, motivating you to tackle larger debts.
Choosing the best strategy depends on your financial situation and psychological preferences. If you want to minimize interest costs, the avalanche method is typically the better choice. If you need motivation and quick wins, the snowball method might be more effective.
Regardless of the method chosen, it’s important to continue making at least the minimum payments on all your other cards to avoid penalties and negative impacts on your credit score.