Managing Your Debt Wisely

If paying down debt is one of your goals, knowing which debt to pay off first can help you get there and make you feel more confident as you move on to other financial goals. All you will need is a sound strategy, discipline, and consistency to make it happen. Here are some tips that can help.

 

When you're trying to pay off debt, sometimes it's hard to know where to start. There are two general approaches, and both can work. The "snowball method" creates momentum by paying off small balances first. The "avalanche method" prioritizes balances with the highest interest rates before moving on to balances with the next lowest interest rate. Explore which debt reduction method is best for you.

 

Paying more than the minimum amount due can help you pay off your debts ahead of schedule, which also saves money on interest. You can add a little extra to each payment or send in an extra payment periodically when you can afford it. Whatever your strategy, small changes may ultimately bring a big benefit. Find out more about how to pay off your debts faster.

 

Closing a credit account may seem like a good idea once you've paid it off, but you may want to consider some important factors before you close down any accounts. Here’s why: Part of your credit score comes from calculating how much of your available credit you’re using. Close an account and you change that ratio by reducing your available credit, which may lower your score. Discover more about what to consider before closing your credit account.

1 This example and chart are for illustrative purposes only. A $10,000 loan with a 5-year term at 7.00% Annual Percentage Rate (APR) would be repayable in 60 monthly installments of $198 each or repayable in only 48 monthly installments of $239.46 each. The actual payment amount and year-end balance will vary based on the APR, loan amount, and term selected.