HOUSTON – Getting rid of debt is a lot like losing weight. It’s about self-control and numbers.
Financial expert Mike Pequeen of Hightower Financial said the best place to start paying off debt is with your credit cards.
“Around the holidays, the temptation to use credit cards is overwhelming,” Pequeen said. “But what most people don’t realize is the average American has between $4,000 and $6,000 in credit card debt, and they’re probably paying around 17% interest on that debt.”
That means, to pay off your $6,000 credit card in 24 months with 17% interest, your payments will be $296 a month. At the end of those 2 years, you'll have paid an additional $1100 in interest.
Getting a pay raise also comes with more temptations.
“The more money you make, the credit card companies know that, and they send you more credit card offers,” explained Pequeen. "So, just realize you have to resist the temptation because we have a trillion dollars in credit card debt.”
How many times have you justified charging a purchase because you thought it was a good deal? If it’s 15% off, but you put it on a credit card with 17% interest that you can’t immediately pay off, you just paid more than the full price for that item.
Pequeen said if you don’t pay off your balance every month, beware of credit cards that offer points and cashback.
“It’s really just bait,” he warned. “Credit card offers and points are really just to get you to use the credit card because credit cards are very, very, very profitable to the issuing companies. So the little bit they give you back in points is nice, and it’s fun, but it doesn’t come close to cutting into the profit they make off of you.”