Credit Cards have surely ended up as an imperative tool in our lives, and we want them to control our finances. The comfort, flexibility, and rewards this monetary instrument offers are unrivaled and have surpassed cash and debit cards.
However, the difficulty in this smooth river arises if such tools aren’t controlled well and the credit card bill payment is not done timely. As they quickly spiral from your manipulation, they lead to economic strain ultimately. Therefore, it’s essential to understand and implement the right debt reimbursement strategy which will manipulate such gear efficiently.
Before diving into the actual-time solutions and strategies, take a step back and examine the scenario. Gather all of your credit score card statements and list down the following information for each card:
- Outstanding balance
- Annual percentage rate (APR)
- Minimum payment due
Top Debt Repayment Strategies in India
● Avalanche Method
In this type of strategy, you prioritize paying off the card with the highest rate of interest first. This is because paying it off first tends to minimize the total interest you pay over time. Moreover, it is essential to understand that focusing on the most expensive debt directly addresses the source of your financial burden.
● Snowball Method
This method for a credit card bill payment basically prioritizes paying off the card with the smallest balance first, regardless of the interest rate. When you opt for this, it is pretty motivating as it pushes you once you witness debt disappear quickly and helps you stay committed to your repayment plan. It also frees up extra money to tackle more significant debts.
Choosing the Right Strategy for You
When it comes to choosing between the above two, it totally depends on your current financial situation.
Avalanche Method
1. Minimize Interest Payment
The top primary benefit of this approach is its typical awareness on minimizing interest payments. This strategy involves paying off money owed with the very best prices first, irrespective of the balance. For folks who are not conscious, this facilitates you to store an extensive amount of money in the end.
2. Faster Debt Elimination
Since this targets the highest rates, it allows one to pay off the debts much more efficiently. This is because by eliminating them first, you can free up more money to put towards your remaining ongoing debts.
3. Financially Optimal Approach
From a purely financial perspective, this is the most optimal approach to debt repayment. By focusing on it, you are allocating your resources to minimize the total cost of debt.
(Pro tip: ‘Bajaj Finserv’ is the best credit card bill payment app. Quite easy to use.)
Snowball Method
1. Psychological Momentum
One of the top pros of this second method is its emphasis on building psychological momentum. This involves spying on debts with the smallest balance first, giving one a sense of progress and accomplishment.
2. Internal satisfaction
It prioritizes your internal satisfaction over strict financial optimization. This is particularly advantageous and helpful for those who may be feeling overwhelmed or discouraged by their debt burden.
Ultimately, the choice between these methods totally depends on you and is your final call. I personally use the Avalance method for my credit card Kotak. Remember to consider factors such as your financial situation and objectives. Therefore, whichever method you opt for, stay committed to achieving financial freedom in the long run.
