How to Get Traction on Paying Off Your Credit Cards in 2020
BY KIMBERLY PALMER
After Ashli Smith, 23, graduated from college last May, she wanted to pay off her credit card debts as soon as possible. She opted for the debt snowball method, or paying off the smallest debts first. That meant starting with a $90 debt for headphones before moving on to a $1,500 credit card balance and then finally a $6,000 one. “You keep going with momentum,” she says. Like Smith, many Americans are looking to pay off debt in the new year. According to NerdWallet’s latest credit card statistics, the average household with this type of debt owes about $6,849. Using the debt snowball method can be a smart choice: Recent academic research shows that paying off smaller balances in full before moving on to the next balance can keep people motivated and on track. The other primary strategy, the debt avalanche method, focuses on paying off the highest-interest-rate debts first. It’s a mathematically sound approach, but one that can be harder for people to stick with because they may have to wait longer to celebrate paying off balances in full. Still, the right approach for you depends on your situation and personal preferences. Here are some tips on how to achieve your 2020 debt payoff goals. There’s a reason the debt snowball method is popular. “People tend to treat paying off individual debt accounts as subgoals towards an overall goal of getting out debt, which means paying off individual debts creates a more powerful, tangible 1 CHOOSE A PAYOFF STRATEGY BASED ON YOUR PERSONAL SITUATION
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