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Reasons to pay off Credit Card Debt

A new year brings with it hope and promise for new beginnings. From losing weight to doing more volunteer work to paying off credit card cards, people set their sights high on improving themselves and their physical, mental, and financial situation. And one good move tends to lead to others; working on your financial fitness can reduce stress, helping you make strides in other areas of your life. So if you’re one of the many consumers in debt, make a resolution this year to pay off your credit cards and get on the road to financial freedom.

10 reasons to pay off your credit cards this year

  1. Stop paying interest and fees. Anytime you make a late payment or are unable to pay the full balance of your credit cards, you’re paying money directly to the credit card companies and making it harder to pay off your credit cards. By paying down your balance, you’ll avoid high interest charges and fees.
  2. Improve your credit score. Have you reviewed your credit report and credit score lately? If not, you may be surprised by what you find. Late payments, missed payments, and high balances all impact your credit score – but so does paid off credit cards and making on-time payments each and every month. Lenders have tightened their criteria since the most recent financial collapse, so it’s more important than ever to boost your credit score in case you need to borrow in the future. You’re entitled to check your credit report once a year for free; for details visit www.annualcreditreport.com
  3. Have more spending money. Feeling crunched for cash? Pay off those credit cards, and you’ll have more cash for the little extras every month. Whether you need a new wardrobe for work, would like to enjoy a dinner out once a week or just want to treat yourself to a few luxuries, paying off your credit cards can make it possible.
  4. Save for a rainy day (or special purchase). While nobody wants to think about it, the unexpected can happen. It's good to be prepared for job loss, unexpected emergencies, or simply save up for a big purchase. Once you pay off your credit cards, you can save that extra payment instead of paying toward credit card interest charges and fees.
  5. Contribute towards your retirement plan. Becoming debt-free will allow you to pay yourself first. Once you've paid your debt off, you'll be able to aggressively save for your retirement. A good place to start is to contribute as much as you can towards a 401(k) plan or IRA. Often, companies will match the amount of money you contribute and deposit it into your account. If you already have an account, you'll be able to contribute more once you pay off your credit card debt.
  6. Take a vacation – and enjoy it. While you’re adding more dollars to your rainy day fund for future expenses, don’t forget to enjoy life today. Paying off your credit cards can leave extra money for a well-deserved family vacation or a romantic getaway. So pay down your balances, pack your bags and make the most of some time off!
  7. Qualify for a mortgage loan. When you pay off credit card debt, you can really improve your credit score over time and standing with major lenders. And if you’re saving up to buy a home, your credit is perhaps the most important factor in determining whether you’ll get approved for a mortgage loan, and if so, the interest rate for which you’ll qualify.
  8. Pay cash for next year’s holiday purchases. Many consumers feel overwhelmed at the start of the New Year once they see the past month’s credit card bills. If that sounds at all familiar, make a resolution this year to pay off credit card debt. Just think how good it will feel to pay cash for holiday gifts instead of giving credit card companies the gift of extra interest payments next January.
  9. Reduce stress. Want to reduce stress in your life? Losing weight, having a strong social network, and creating a comfortable work/life balance will help – and so will paying off credit card debt. You may not realize it now, but financial problems can be a huge stressor in your life. Once you take the steps to reduce your debts and get on the road to financial freedom, you may find that you’re able to relax and live at peace.
  10. Start next year debt-free. Imagine how you’ll feel once you pay off your credit cards, and resolve to start making a change this year. Start the following New Year debt-free, and you’ll feel great knowing you’re finally in control of your finances. Then resolve to never, ever fall back into debt again.

A good place to start is to use a credit card payoff calculatorto determine how quickly you can pay down your debt.

What are your reasons for paying off credit card debt this year? Share your thoughts and connect with other consumers just like you by posting in CareOne's online community forums.  

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