How interest rates affect your debt payoff


If you have multiple debts,๐Ÿ’ธ๐Ÿ’ธ chances are they have different interest rates,๐Ÿ“ˆ๐Ÿ“ some higher than others. In a debt payoff plan, it's best to pay the credit cards๐Ÿ’ณwith the highest interest rates first - from a financial standpoint at least. โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €
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The Cost of a High-Interest Rate๐Ÿ“Œ๐Ÿ”’

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It costs more to carry a balance on a high-interest rate credit card. That's because your monthly finance charge is based on your interest rate and your balance - the higher your interest rate, the higher your finance charge will be.๐Ÿ“Š Not only that, the longer you take to pay off the card, the more money it costs you because you pay more in finance charges when you pay the debt off slowly. Paying off high-interest rate debt first saves money and usually lets you pay off the debt faster.๐Ÿ’ก๐Ÿ’ก๐Ÿ”Œ
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Could Paying the Smaller Balance First Work?๐Ÿค”๐Ÿค”

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Paying high-interest rate debt first makes sense from a financial standpoint, but that method isn't best for everyone. When small debts are paid off sooner, you remain motivated to pay off the next debt and the next until you're debt free.๐Ÿค—๐Ÿ˜ฅ
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It's true that the ๐Ÿฅ‘smallest-balance-first method lets you pay off some debts sooner in the beginning.๐Ÿ™„ โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ € โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €
Having an account completely paid off is a great feeling. But remember, it takes you longerโฐโณ to pay off the debt completely under the smallest-debt-first method.
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When you're ready to pay off your debts, you have to decide if you need the motivation๐Ÿš€ from paying off smaller debts at the expense of spending more money on interest. Don't spend too much๐Ÿ›€๐Ÿ›Œ time thinking it over; the important thing is that you get started even if it means paying off some debts quickly.๐Ÿ›ซ

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