Holiday shopping can be tons of fun — getting gifts for your loved ones, supplies, or decorations. It can also be costly, especially if you made your purchases on credit.
As of May 2022, the average credit card interest rate in the United States on accounts with balances that accessed interest was 16.65%. Credit card APRs can vary widely though, based on your credit score, debt-to-income ratio, the issuer, and other factors. And, if the balance lingers, you may find yourself still trying pay off the balance plus interest charges years down the road.
Example:
The annual interest rate (APR) on your credit card is 16.65%. You have a balance of $3,000 on your card with a minimum payment of 2.5%. If you make minimum payments only, it would take 20 years to pay off and you'd have to pay over $3,000 in interest charges.
Principal Balance Owed: |
$3,000.00 |
Credit Card Annual Interest Rate (APR): |
16.65% |
Minimum Payment Percentage: |
2.5% |
Years to Pay Off Existing Balance |
20 Years |
Interest Paid |
$3,430.29 |
Principal Paid |
$3,000.00 |
If you should find yourself in a similar situation as the example above, you're not alone and there's hope. We're sharing three payment strategy options you should consider when paying down debt. To "sleigh" your debt quickly, it's important to remember, before you commit yourself to any payoff plan, you must first commit to not add to the balance.
1. Snowball Method
The snowball method is a debt payment strategy that can help keep you motivated by reducing the number of debts you pay each month. With this method, you'll focus on paying off debts from the smallest balance to the largest balance. Start by paying as much as you can toward the card with the smallest balance, while still making sure to pay at least the minimum amount on all other accounts. As you pay off one card, roll the amount that you were paying to the card with the next-lowest balance.
2. Avalanche Method
With this debt payment strategy, you'll focus on paying off the credit account with the highest interest rate first. Start by paying as much as you can toward the bill with the highest interest rate. Remember to budget enough money towards making at the least the minimum payment on all other accounts. As you pay off one card, roll the amount you were paying to the card with the next-highest rate. With the avalanche method, you'll limit the amount of interest you'll pay as you reduce your debt.
3. Debt Consolidation
A debt consolidation loan or balance transfer are also worth considering to help you pay off your debt. How do they work? The premise behind a debt consolidation loan and a balance transfer are the same — transferring high-interest balances to a lower interest loan or credit card. Once you're approved, use the funds from the debt consolidation loan or balance transfer to pay off your high-interest debt. Then, focus on making payments towards your debt consolidation loan or lower-interest credit card. For balance transfers with promotional rates, to save the most money, pay off your balance before the promotional period ends and your interest rate goes back up.
Member First Credit Union of Florida's Visa® credit card options are an excellent choice for a balance transfer. Each card comes with a fixed rate that is low and competitive. You can also bring yourself one step closer to peace of mind with a Members First debt consolidation loan. Reduce your total debt and reorganize it by rolling your debts into a single, low monthly payment so you can pay off your debt faster. Speak with a Members First representative to find the right debt repayment option for you. Call us at (850) 434-2211 and select option 2 or stop by one of our branch locations.
Get Your Financial Check-up
Are you on track to meet your goals? If you're curious how your financial health checks out and what you could do to improve your financial well-being, take the Members First Credit Union of Florida Financial Wellness Quiz.
Although there isn't a one-size-fits-all solution to financial emergencies, there are steps you can take that will minimize damage while you work on a recovery plan. Having an emergency fund is an important resource for you to have during emergencies, but what are other steps that you can take to help your financially during a crisis? We'll talk about that and how to help you decide on the best financial plan for your needs.
Consumer debt is a common and incredibly personal part of our personal finances. The majority of U.S. adults owe money in some way, shape or form, but what this debt represents can vary from person to person. Whether you're paying down medical bills, educational expenses, home repair costs, or other high-interest purchases, there are steps you can take to help you conquer your debt.
Ready to get on the road? We have the resources to make your driving dreams a reality. Get tips on purchasing a new vehicle, shop local dealer inventory with our Car Buying Service, enjoy Auto Rewards when you finance with us, and more.
Thinking about buying your first home or another property for rental income? Members First Credit Union of Florida is here to lend a helping hand with the home-buying process from advice to financing.
People need personal loans for a variety of different reasons. Whether you need funds for an emergency, medical bills, a much needed vacation, or your dream wedding, taking out a personal loan from your credit union as opposed to another type of lender is typically cheaper. We'll share why and lend a helping hand to finance your needs and/or dreams.
Compound interest is a powerful concept in saving and investing — it pays to start saving early. We'll show you how and lend a helping hand in making your future brighter with savings and investment options like IRAs and CDs.
Budgeting doesn't mean you have to give up everything you love. Whether you're planning your first budget or re-evaluating your current budget, we'll share some ground rules that will set you up for success by changing the way you look at budgeting and help you create the guidelines for managing your money.
Your credit score shouldn't be a mysterious number. Whether you've had past troubles, haven't yet established any credit, or want to get the best possible rate on a loan, knowing your score and how your credit score is calculated is important to your financial wellness. We'll share information and tips to help you create a positive credit history and boost your credit score.
As a valued member of Members First Credit Union of Florida we want to know how we can better serve you by improving the products and services available to you. To do this, we ask that you take a moment to answer this short survey to let us know what we can do to make our Checking Accounts more beneficial to you.
As a valued member of Members First Credit Union of Florida, we want to know how we can better serve you by improving the products and services available to you. To do this, we ask that you take a moment to answer this short survey to let us know what we can do to make our deposit accounts more attractive and beneficial to you.
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