Why is credit card debt so dangerous?
Because the interest rate is high and it compounds. At around 22%, a balance can balloon even if you never spend another dime, since each month's interest gets added to the pile that next month's interest is calculated on. It's the same snowball as investing, just rolling downhill at you.
Should I pay off debt or invest?
Generally, paying off high-interest debt is a guaranteed return equal to the interest rate, and beating a guaranteed 20% by investing is nearly impossible. After capturing any employer match, wiping out high-interest debt usually comes before investing the rest.
How do I get out?
Stop adding to it, then attack the balances: either highest interest rate first (saves the most money) or smallest balance first (builds momentum). Both work; the one you'll actually stick with is the right one.
Questions
Frequently asked
Avalanche or snowball, which debt payoff method is better?
Avalanche (highest interest first) saves the most money mathematically. Snowball (smallest balance first) gives quicker wins for motivation. Pick the one you'll actually follow through on.
Is all debt bad?
No: low-interest debt that builds an asset (like a mortgage or sometimes student loans) can be reasonable. The trap is high-interest consumer debt, which compounds against you faster than your money can grow.
