Credit Card Debt
When it comes to money, what is the first thing that comes to mind? Student loan debt? Your mortgage? The electric bill?
What about credit card debt?
CreditCards.com reported that credit card debt hit $975.9 billion in 2020, ranging anywhere from $1,600 to $5,800 per person, depending on the type of card. And anyone with a credit card knows that with an interest rate as high as 24%, the longer it takes to pay off this debt, the more you pay over time.
To combat credit card debt, we offered five main ways to pay down a high balance in “How to Reduce Your Credit Card Debt“:
- Consolidate debt.
- Make a budget.
- Pay as much as possible.
- Delay investing.
- Try to get a lower rate.
But how does credit card debt affect your credit score?
Credit Card Debt & Your Credit Score
Your credit score––ranging from a low of 300 to a high of 850––reflects how well you manage your credit and pay your bills. Late or missed payments can lower your score, but so can a high balance.
For those who struggle to pay off their credit card debt, your yearly tax refund or the recent stimulus checks may come as a saving grace. After all, this money is a quick and easy way to knock down your balance by a couple hundred dollars, if not more, and relieve you of that added stress.
In “How to use your tax refund to boost your credit score” CreditCard.com dives into:
- How credit utilization, or the percentage of credit you use each month, affects your score. (They recommend limiting your utilization to 25% or 30%.)
- How to use your tax refund or stimulus check to reduce your credit utilization ratio.
- Alternative ways to allocate your tax refund or stimulus check.
More Resources From Haven Financial
Credit card debt and credit scores are a big concern for many people. At Haven Financial, we strive to create a personalize financial plan for each client that reflects their specific needs, concerns, and goals. While we invite you to check out some other articles surrounding these topics, we encourage you to rethink your commitment to money management and get started on the path to building a stronger financial future. Schedule a free 15-minute introductory call and discover what Haven Financial can do for you!
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