Best Way To Get Rid Of Credit Card Debt

When looking at credit card bills, most people only pay attention to the total amount of the loan. However, if that's your priority, chances are you won't go any further in paying off debt. The question is, what is the best way to get rid of credit card debt?

Illustrative image (Picture: onefinewallet.com)

After analyzing data from 1.4 million credit cardholders in the UK who own more than one card and don't pay off the entire bill each month, researchers found that people choose highly ineffective strategies to pay down debt. The report was written by Christopher Ingraham in The Washington Post and quoted by CNBC Make It.

Best Way To Get Out Of Credit Card Debt Fast

Mathematically, the most effective way to write off debt is to follow the 'snowball avalanche' method, which sorts debt from highest to lowest based on interest rates. Pay the minimum amount for each debt, then add as much extra as you can each month to the debt with the highest interest rate.

However, in another study, researchers realized that people used a method known as 'balance adjustment'. In this method, the amount of money paid per card per month is proportional to the total loan amount on the card.

Switching to the avalanche method will feel reasonable from some points of view. In 2016, researchers from the Harvard Business Review found that the "snowball" method proved to be the most effective strategy.

The method popularized by Dave Ramsey's book "The Total Money Makeover" prioritizes the smallest debt first regardless of interest rates. To try it out, start by sorting all debts from smallest to largest. Pay the minimum amount for each debt, except the smallest. For that part, dedicate as much cash as you can each month until the debt is paid off. Then, move on to the other smallest debt.

The idea is that you will gain momentum when you see debt disappear as the snowball gets bigger, it will motivate you to continue.

This method is very interesting, isn't it? Hopefully this information about the "best way to get rid of credit card debt" is useful for those of you who want to immediately pay off your credit card debt.

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