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Choosing how to pay off debt from credit cards

Kentucky residents know that mounting credit card bills may be difficult to pay down. During the second quarter of 2016, consumers around the country added $34.4 billion to the credit card debt already owed. MarketWatch and WalletHub both predict that total debt from credit cards may reach the $1 trillion mark by the end of 2016.

Two useful strategies exist for repaying credit cards. One is called the snowball method and the other the avalanche method. However, there are pros and cons to each. Preparing a budget to monitor inflow and outflow of funds is important to keep debts controlled.

Those who want to see progress right away may choose the snowball method. By paying off credit cards with smaller balances, the debtor might become motivated when the number of credit cards with outstanding balances gets smaller.

In the avalanche method, the debtor pays against the credit cards with the highest interest rate. By doing so, cardholders can focus on the debt that has the potential to rapidly grow. However, paying off credit cards this way might appear to be making less headway on the surface, since smaller debts remain. The method a debtor chooses to pay off debts is an individual choice. However, focusing on debt and setting aside money to pay more than the minimum on credit card debt is a good idea.

If neither of the foregoing alternatives are plausible, or if they have been tried but to no avail, consumers may want to consider filing for bankruptcy. Chapter 7 offers the possibility of having credit card debt discharge, but it is not for everyone. An attorney can describe the eligibility requirements and the effect that a filing would have on a client's credit rating.

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