Credit card debt can delay emergency savings, investing and homebuying. During National Financial Planning Month, experts recommend paying on time, targeting one balance and tracking progress.
By Janet Currie
Afro
https://www.afro.com/
October is National Financial Planning Month, serving as an annual checkpoint to evaluate your budget, reduce debt and optimize year-end tax and retirement strategies.
Unsplash/ Towfiqu Barbhuiya
While all of these are important aspects of smart financial planning, lowering credit card debt continues to be high on Marylanders’ financial to-do lists. More than one-third (34 percent) of Americans surveyed name paying off credit card debt as a top financial goal for the year, according to a report from the National Endowment for Financial Education.
And it’s a life changing one. Credit card debt impacts the way families manage other critical financial milestones. A recent Bankrate study found that 64 percent of Americans carrying credit card debt have delayed, or avoided, other important financial decisions because of it. Among them, 34 percent delayed building emergency savings, 23 percent delayed investing and 13 percent delayed purchasing a home.
Janet Currie is the president of Bank of America Greater Maryland. This week, she recommended strategies for reducing credit card debt.Courtesy photo
With these statistics in mind, here are several actionable steps from our Bank of America Better Money Habits platform to help individuals and families manage and reduce credit card debt this National Financial Planning Month:
Pay on time and pay more than the minimum
Late payments result in costly fees and add to your overall balance. Paying on time and including a bit extra every month accelerates balance reduction and lowers total interest paid.
Focus on paying off one card at a time
Credit card debt can feel overwhelming, but you can get there with the right strategy. To start, focus on one debt at a time (while still paying the minimum on every card).
Pick a plan and stick to it
The Avalanche Method (high-interest first): One strategy, known as the high-rate method, is to focus extra payments on the card with the highest interest rate first. This will help save the most money over time.
The Snowball Method (smallest balance first): Another option is the Snowball Method, where you focus on paying off the card with the smallest balance first to build momentum and quick visual wins.
Consolidate debt where you can
Transferring high-interest balances to a card with a lower interest rate can save money and help pay down debt faster. Always read the fine print regarding potential balance transfer fees.
Track your progress
Monitoring your declining balance keeps you motivated as you get closer to financial freedom.
Reducing or eliminating debt is one of the most impactful steps you can take toward securing your financial future. For additional tools, actionable advice and guidance on debt reduction and budgeting, visit Bank of America’s free resource center at bettermoneyhabits.bankofamerica.com.
Wishing you a successful and empowering National Financial Planning Month!
The opinions expressed in this commentary are those of the writer and not necessarily those of the AFRO.
