Yahoo Finance has posted a helpful article that provides 6 tips about how you can pay off credit card debt.
1. The first tip makes the very important point that paying off your credit card debt is more so about behavior modification and not just math. Dave Ramsey, author of “Total Money Makeover”, suggests paying off smaller debts first, regardless of interest rates, so you will feel motivated to keep paying off more debts, which he calls the “snowball” effect. He also says that you should only pay off a large debt first if it’s to stop a foreclosure or if you owe the IRS.
2. However, if you’re a numbers person, paying off a large debt with a high interest rate first could be more motivating for you.
“Also, if the account with the highest interest is utilizing more than 30 percent of that credit line, focus on paying that one off first to get it under that threshold,” she says. Doing so will improve your credit score since debt utilization, which is how much you owe compared to how much available credit you have, is an important factor in determining your score. The lower your utilization is, the better.