Now that December is over many credit card statements will arrive with higher balances owed due to increased spending. So if you find yourself with a higher than normal balance on your credit cards there are several ways to reduce the debt. One way is to pay them off completely, and if you have the excess cash to do that it is a great idea. If you do not have the cash to pay them all off, but can pay the balance off of one (or more) of them, then deciding where to apply the funds to provide the most benefit for you is important.
Before making the first payment, compile a list of your cards. Using a spreadsheet for this task is a good idea if you have several cards. In a spreadsheet the information can be sorted based on balances, interest rates, or other criteria.
There are a few main things to consider when trying to reduce credit card debt. One is if you have a large balance on a higher interest credit card can you reduce your cost by transferring the balance to a 0% interest card? If so, it is worth considering the transfer. Another thing to look at though is that most cards will charge you a minimum of 3% to process the transfer. Will you save enough over time to make up for the 3% charge? Reviewing what the interest rate on the 0% card will be when the promotional period is over is also important. If there is a question about being able to pay off the balance before the 0% is up then transferring may not be in your best interest because of increased cost when reaching the end of the discount period.
The next thing to consider if you still have outstanding balances is will it be better to pay off the lowest balance first, or the card with the highest interest rate? If you can pay off the credit card with the lowest balance soon, and then take the money you were paying on that card and apply it to the card with the next lowest balance it may make sense (at least mentally). However, from a financial perspective you will pay more money doing it that way. If you pay off the card with the highest interest first, then use the freed up money to pay on the next one with the highest rate it will save more money.
Whichever method you use to reduce your debt, freeing up more cash to use as you see fit is a good thing. So make 2019 the year you increase your financial assets.