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Make Credit Card Debt First To Go

3 reason to take care of credit card debt firstMany Americans are saddled with a variety of debt and struggle with the decision on how to proceed in paying it down.

Having extra money to put toward your debt is always a good problem to have.

But where should that money go? No question, pay down your credit card debt first.

Credit card debt is high-interest debt. Mortgages, auto loans and student loans generally carry single digit interest rates, while credit card interest averages nearly 15% and can be as high as 30% in some cases.

Paying down high interest debt first will save you a good amount of interest payments over time.

Credit card debt is bad debt. A credit score is compiled using a variety of factors, but a high amount of credit card debt weighs against a consumer more than a high mortgage debt.

Taking on a mortgage is seen as a “good debt” and owning a home makes you look good in the eyes of a creditor.

On the flip side, owning a lot of credit card debt tells creditors you may be in trouble financially, even if you think things are under control.

Paying down credit card debt will improve your credit score. The more debt you amass against available credit, the farther your credit score will plummet.

Paying down that debt will give you better debt-to-income and debt-to-credit ratios, thus elevating your credit score.

Your increased score can actually help on lowering the interest rates on other debt, and this move could potentially save thousands.

Credit cards can be great at saving money with rewards programs and initial bonuses but they can also be debt traps.

Do your best to pay your debt off as soon as you can, so the full value of a credit card can be appreciated.

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