In a perfect world, you’d have no credit card debt. And when you do use your card, you’d have the ability to pay it off in full at the end of each month. Unfortunately, that’s not the case for everyone. Millions of people find themselves buried in credit card debt and wondering what to do next.
If you fit into this group, there’s an important question to answer: should credit card debt be your top priority?
There’s no simple answer, as this depends largely on your financial circumstances across the board. Even so, most people in this position realize that paying down their debt as quickly as possible is in their best interest.
Here are five questions you can answer to help determine if credit card debt should be your top priority:
1. What is your current credit card balance?
Knowing your balance will help you determine if it deserves priority over other debts in your life. Remember to tally all balances spread across multiple cards.
2. How many credit cards do you have with a balance?
Don’t just focus on the credit card with the highest balance. Consider every card that you have with a balance, even if it’s small.
3. What is your interest rate?
Make note of the interest rate associated with each credit card. The higher the rate, the more money it costs you to carry a balance.
4. What is the minimum monthly payment?
This is the minimum amount of money that you have to pay to avoid a late fee. Can you afford this amount? If you only pay the minimum, how long will it take you to eliminate your balance?
5. What other types of debt do you have?
If credit card debt is your only debt, you can focus all your energy on paying it down as quickly as possible. But if you’re juggling it with other types of debt — such as a personal loan, home equity line of credit, and car payment — you need to be more calculated with your approach.
Once you answer these questions, you can better decide if credit card debt should be your top priority. Even if you don’t move it to the top of your list, there’s a good chance you’ll want to pay more attention to it in the future.
Do you have credit card debt? How do you manage it? Is it one of your top financial priorities?