‘Debt avalanche’ method effective for those with multiple creditors
Annuity.org: Average American has $5,500+ in credit card debt
InvestigateTV - According to a study by Annuity.org, the average American carried multiple credit cards, with the average debt load being $5,525, and experts suggest using the debt avalanche method to pay off these multiple accounts.
Sara Rathner, a personal finance expert with NerdWallet, said the debt avalanche method helps organize your debts and pay less in interest over time.
Rathner laid out the steps of the debt avalanche method:
- Prioritize your debts from the highest interest rate to the lowest interest rate
- Make minimum payments on all of your debts to avoid late fees and keep accounts in good standing
- Any time you have extra, pay it towards the highest interest rate debt
When the highest interest rate debt is paid off, take the monthly amount you were paying on it and apply it to the next highest interest rate card, while continuing to pay the minimum on all the others and then repeat this method until all of the debt is paid off.
For more information, NerdWallet explains the debt avalanche in detail in this video.
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