When you’re faced with a mountain of debt you’re trying to tackle, one of the biggest decisions you’ll have to make is which debt to start paying off first. After all, with debt, often one of the most overwhelming factors is that it comes from so many sources–mortgages, auto loans, personal loans, credit cards, etc. 

Traditional advice frequently suggests paying off credit card debt before focusing on other debts–but is this advice still prudent? Does it make sense to pay off credit card debt first, or if not, what debt should you pay off first to save money?

Every strategy starts with making minimum payments

Before you start thinking about which debt to tackle, it’s important to lay down some ground rules that you really need to follow to make sure you don’t make a stressful financial situation even more overwhelming. 

The first (and biggest) rule to live by is that you should always be paying off at least the minimum payment on every debt, every month, whenever possible. We know that debt is a tricky business–if you had the cash on hand to pay off every debt in full, you wouldn’t be reading this. But it’s crucial to make those minimum payments each month for every debt, because if you don’t, then you start piling on late fees and other additional costs, which will add to the mountain.

Once you tackle those minimums, then you can begin focusing on making additional payments in a more strategic manner. And in order to do that, you also need to be budgeting for debt repayment. It’s so easy to just “give in” to debt, especially when so many immediate and pressing bills are piling up–but if you make sure that you’re budgeting at least a bit of money every month to pay down your debts beyond the minimum, you’ll start climbing out of that hole.

Benefits of paying credit card debt first

Paying off credit card debt is a great way to boost your credit score. Credit utilization (the percentage of a given credit line you’re using at any moment) is a major factor in your credit score calculation, and by paying off this debt, you’re lowering that utilization and making yourself look better for the credit reporting bureaus. 

Paying down your credit cards can reduce the temptation to spend in the future. Unlike something like a mortgage or a car loan, credit cards allow us to add additional debt any time we swipe at the store–and that temptation is real. By paying off one card’s balance, we can take that card out of regular usage and limit how much we spend, which will in turn free up more budget to pay down other debts!

Effective debt payment strategies

When tackling overwhelming debt, experts typically recommend one of two strategies: Either the Debt Snowball method or the Debt Avalanche method. 

The Debt Snowball method works by paying off your smallest debts first, freeing up more and more money with each small debt paid to put towards paying off the next largest, until you finally tackle those massive balances. The benefits to this strategy are mostly psychological: you get that joy from getting a “win” with each easy/small debt you pay, giving you both emotional and financial momentum to tackle the tougher hills. 

However, the drawback to this method is that it may not be the most financially efficient, even if it’s the most psychologically appealing. That’s where the Debt Avalanche method comes in. The Debt Avalanche strategy involves prioritizing debts based on interest rate, rather than balance–you tackle the highest interest rate debts first so that they don’t continue to balloon out of control, and leave the slower-growing debts for later as they’re less urgent.

So where does that leave us with the original question, about prioritizing credit cards? Well, truthfully, it may be the wrong question to ask. While there are plenty of advantages to paying off credit cards, when tackling debt from various sources, you’ll want to strategize based on a number of factors–interest rates, overall balance, and how each debt will affect your credit score. Often, this will mean paying off credit cards first, but it’s not a universal truth.

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