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Do you already have high-interest debt?
In either case, you may be wondering how this debt can impact your long-term financial health.
How Does High-Interest Debt Impact Financial Health?
High-interest debt hurts your financial health for a few reasons.
First, its expensive.
You would spend over $16,000 in interest on the account by the time you paid it off.
That means your total interest cost would be over 160% of the total value of the original debt.
Types of High-Interest Debt
Any key in of debt can be a high-interest debt.
Heres a list of the types of loans that typically come with high interest rates.
But you dont have to deal with that debt forever.
Here are a few ways to eliminate your high-interest debt.
For example, you could use the debt snowball or debt avalanche payment method.
Youll make minimum payments to all but one account with both methods.
With the debt avalanche method, youll direct all extra payments to the card with the highest interest rate.
Once you pay off the first target account, you move to the next one.
But keep in mind that if you choose the latter, youll be using your home as collateral.
So that should be an option only if youre absolutely sure you might afford the payments.
On the other hand, settlement typically comes with significant credit implications and may have tax implications.
So this should be considered only as a last resort.
However, this can be a tough decision thats worth chatting about with a bankruptcy attorney first.
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