CHARLOTTE — Looking to pay off credit card debt? Action 9 investigator Jason Stoogenke wants to make sure you know about the “avalanche” and “snowball” methods.
In both cases, keep paying your bills, at least the minimum.
The “avalanche” method: you focus on paying the debt with the highest interest rate first. Then, you move to the next highest.
The pros and cons: you’ll probably save more money in the long run. You may even erase your debt in less time, but you may not notice the results as quickly, so it could be hard to stay motivated.
The “snowball” method: you tackle the smallest balance first. That’s right, balance, not interest rate. You pay that off, then move on to the next smallest balance.
The pros and cons: you’ll see progress right away and build confidence, but you may end up paying more interest than with the “avalanche” method. It could take longer and cost more.
Either way — “avalanche or snowball” — the key is to stick to the plan.
Sarah Cantito told Stoogenke she was going through a divorce, racked up around $30,000 in debt, and decided to tackle it.
Did she think, “I’ll believe it when I see it?”
“Yeah. Probably until it was done,” she can laugh now. “It was very intimidating until I started. Once I started, the process was really smooth.”
She thinks it was the “avalanche” method that worked for her, “thinks” because she used a credit counseling nonprofit Stoogenke has told you about before, Money Management International.
“It was really convenient, easy, not confusing at all,” she said.
She paid a set monthly amount to MMI and the group handled the rest. Two years later, her debt was gone.
“It was amazing,” Cantito said.
Another nonprofit that helps combat debt is GreenPath.
Other strategies to beat credit card debt specifically:
- Don’t be afraid to negotiate. See if your credit card company will give you a better rate.
- If you have a major purchase coming up, you may want to open a new credit card, one offering 0% interest. Just make sure you read the fine print and still be sure to pay it off each month.
- Consider consolidating your debt with — what’s called — a “balance transfer” credit card.
But a few words of caution about the third option:
1. Usually, you need good credit to qualify for these cards.
2. Most of these cards charge a transfer fee.
3. The interest rate will go up after the promotional period.
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