One of the top financial New Year’s resolutions that people made for 2018 is to pay off debt. Second only to the resolution to save more money, 25% of respondents had hopes of reducing what they owe this year. These ambitions come as no surprise, as it was also reported that in 2017, the average American household had $15,654 in credit card debt. However, despite these intentions to better manage debt, most people don’t know where to start. This is especially true for individuals with a high amount of loan and credit card debt.

One excellent place to start tackling your debt is with your credit cards. Often, credit cards have the highest interest rates of any form of debt, so it makes sense to reduce your balances as quickly as possible. Additionally, having a good credit score is essential for future purchases. Explore three ways to better manage your credit this year.

Pay off the smallest balances first

If you have 3, 4, 5, or more credit cards with balances, starting to pay down your debt can feel overwhelming. Depending on your balances, it may seem that even sizeable monthly payments make no significant impact. That’s why it pays to focus your efforts on the smallest balances first. Have a credit card with a $200 balance, while your other cards have balances of $900+? Pay off the $200 balance first. Doing this eliminates the monthly payment on the smaller balance, which you can later use to pay off your larger balances in less time.

Write credit dispute letters

Are you less than excited about your current credit score? In addition to reducing your debt-to-credit ratio, there are other strategies that you can use to boost your score. In 2013, it was reported that 1 in 5 Americans have at least one mistake on their credit report. Due to the high number of errors that occur, it pays to check your report for inaccuracies. If you find that you have incorrect information on your credit report, you can write a credit dispute letter to resolve the matter. These letters are an effective (and free) way to boost your credit score.

Never let a late payment exceed 30 days

Whether you’ve experience a job loss or another financial hardship, there can be times in life where there isn’t enough money by the time your payment due date arrives. While it is always best to pay your bills on time, you do have a bit of flexibility. If you pay your minimum payment (and any late fees) prior to reaching 30 days late, no damage will be done to your credit. Why? Credit bureaus only consider credit card payments late when they are 30 days past the due date. Therefore, if you need to delay payment, never make your payment beyond 30 days late.

Managing your credit and paying down your debt can be an achievable goal. Although it takes strategy and discipline, the reward of a higher credit score, fewer payments, and more financial freedom are easily worth the effort.

Photo by William Iven on Unsplash