Short Answer: Yes, you likely have options
Unless your credit card debt exceeds $2,000, in which case you have one choice – pay off as much of that credit card debt as you can.
This is because of the overwhelmingly high interest rate that accompanies outstanding credit card balances (imagine treading water in quicksand . . .). Further, credit card debt can cause long-term issues like preventing you from getting a car, house, or future credit cards.
If your credit card debt is less than $2,000, you have some options, other than paying off debt. Two Action Steps to consider:
- List your debts in order of payment priority
- Confirm that you are contributing the minimum amount to your 401(k) to receive the maximum company match
Sticking with the credit card piece of your question, a great way to make an immediate impact on your credit score is to make a payment on a card that has the highest balance in regard to the credit limit. I.E, if you have a $500 limit with a $450 balance, your credit score will be more positively impacted than paying on a $1,000 balance on a card with a $5,000 limit. (It doesn’t make a ton of sense, but we didn’t make the rules, we just share ’em!). Paired with, closing or at least closing access, to that credit card.
Now, if you have no debt, or you’ve already strategically paid some of your debt (go you!), a gift you can give your future self is to invest some of your cash today. Our Troutwood app can tell you exactly what to expect if you create a plan around investing $1 or $100 or $1,000.
Credit card debt is different than student loan debt and is different than secured debt (homes and cars). But is a legal obligation, which means you are responsible for paying it back.