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Credit card payoff strategies

When South Carolina residents become overwhelmed with credit card debt, they will often begin to look for strategies for managing their financial situation. Because most people want to meet their obligations and pay down their balances, these consumers will often consider one of two popular strategies.

.The snowball and avalanche methods are actually two very similar approaches. In each one, the debtor selects one card and uses available funds to pay it down completely while making minimum payments on his or her other cards. The difference is in the selection and prioritization of the credit card debt balances.

In the snowball strategy, the debtor prioritizes paying off the card with the lowest balance. After that debt is completely paid, the debtor moves onto the card with the next lowest balance. The advantage to this method is the sense of completion and reward that the debtors experiences as they pay off their obligations.

Critics of the snowball method have pointed out, however, that the method ignores the issue of interest rates and the total amount of debt that gets paid down over time. These critics instead have suggested the avalanche method in which the debtor prioritizes the payment of the card that has the highest interest rate, regardless of the balance. This method minimizes the debtor's out-of-pocket costs, though it does not necessarily give the debtor the immediate sense of achievement that the snowball method does.

In some cases, people may find that their debt is so overwhelming that neither of these systems is realistic. They may want to meet with a bankruptcy attorney to see if filing under Chapter 7 is a viable alternative for them.

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The Huggins Law Firm, PA

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