In each new installment of the Sum180 Webcast, we discuss issues around your money and share tips to help you reach your goals.
We’re talking about managing credit card debt.
The issue: Managing credit card debt
The average American household carries $7,000 in credit card debt. A couple in New York in their late 30s reached out to us at Sum180 with a question about whether they could afford to take on some college debt for their children. What we told them is that first, they need to clean up some credit card debt. They were making minimum payments on about $6,500 in credit card debt across several different cards. The minimum payments seem easy to make, but what people don’t realize is that’s probably just paying interest. On $6,500, the interest is likely to be around $1,600 a year. So there you go, making payment after payment, but never even touching the paydown on $6,500. We gave them a detailed payment plan that showed them to pay off the most expensive card first, and in about 6-7 months. they were able to move that credit card debt off the books. That freed up about $1,600 for other expenses.
Please watch the video for more advice about paying down credit card debt.
The question is from Megan, a 33 year old marketing professional. Her question: “I pay down my credit cards every month, but I have a bunch of them – Banana Republic, Victoria’s Secret, you get the idea. Am I hurting my credit score by having so many store cards?”
Please watch the video to hear my advice for Megan.
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