January is an appropriate month for confronting credit card debt

Now that the holidays have come and gone, many Mississippi residents are pondering how to get rid of two things: extra pounds and extra credit card debt. After the holiday season, credit card debt may be particularly challenging. Tax season is around the corner and many families may already be struggling to pay the government while also paying back their consumer debt. In addition, credit card debt tends to have notoriously high interest rates and thus the New Year becomes a fitting time for a reassessment of one's financial situation.

If debt isn't entirely overwhelming, there may be several strategies that prove effective for paying off or paying down credit card debt. For those who find it tough to stay motivated, paying off the smallest card first may provide the mental boost needed to tackle larger balances. This may not be ideal, however, for balances of over $1,000. If a debtor's balances are over 30 percent of their available credit, they may want to try confronting the card with the highest interest rate first. However, a cardholder must continue making at least the minimum payments on other cards in order to avoid slipping further into a negative financial situation.

For those who don't mind crunching numbers, they may want to calculate how paying just a few extra dollars every month can impact their debt. For others, it may be more worthwhile to talk to their creditors directly and request a lower interest rate. This generally works best for cardholders who are already creditworthy. Some consumers may look into a balance transfer, but switching a balance to a card with a lower rate might not be worth it if the fees are steep.

While some of the above tactics might be appropriate for Southaven residents, for others they may not be enough. Those with overwhelming debt may look into bankruptcy as a means for obtaining a fresh financial start. Filing for bankruptcy can translate into discharged debts or a manageable repayment plan that fits a person's existing budget.

Source: Market Watch, "5 ways to tackle post-holiday credit card debt," Vera Gibbons, Jan. 2, 2015

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