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The cost of carrying a credit card debt balance

The average household in Massachusetts and throughout America has a credit card balance of $6,081. It is not uncommon for credit card balance holders to carry that debt for many years, which can lead to thousands of dollars in accrued interest.

Someone who made just the minimum payment on a $6,081 balance with an interest rate of 14.99 percent would pay $4,063.89 in accrued interest. However, by paying $100 more than the minimum payment each month, that person would accrue just $1,409.26 in interest. By making the minimum payment each month, an individual would take 169 months to pay off that debt. Paying $100 more than the minimum each month would allow a debtor to pay that balance off in just 41 months. Eliminating the need to pay interest on credit card debt can actually produce a better return on a person's money compared to most investments.

Individuals who are interested in paying down their credit card debt as quickly as possible can use either the snowball or avalanche method. The snowball method focuses on paying down the smallest balances first while the avalanche method focuses on paying down the cards with the highest interest rates first. After getting out of debt, it is worthwhile to continue paying off balances in full each month.

Filing for bankruptcy might be an effective way to obtain debt relief. In a Chapter 7 case, an individual may have credit card and other unsecured debts discharged in a short period of time. While a bankruptcy case is ongoing, creditors generally cannot contact a debtor or take actions such as repossessing a car or foreclosing on a home. An attorney may be able to explain the process of filing for bankruptcy or who may qualify for Chapter 7 bankruptcy protection.

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