There are many advantages to paying off large debts sooner rather than later. One of the most beneficial aspects of paying off one’s debt is that it cuts accrued overall interest. For instance, high-APR credit cards can be expensive because of accumulating interest over time. The more money that a person pays on a credit card debt, the sooner it can be paid off.
While it is quite common nowadays to go into huge debt with credit cards and personal loans, getting rid of debts can help people gain peace of mind. In fact, research has found that adults who carried large debts were three times more apt than people who have no debts to suffer mental disorders, depression or anxiety.
Another important benefit to paying off one’s debt is that it provides financial stability in the event of an emergency, such as an illness or accident. This puts people in a position where they can protect themselves and their families.
Paying off debts can also improve a person’s credit scores. The more debts a person has, the lower their credit scores are. In fact, about a third of a person’s credit score consists of money owed to lenders. Therefore, people who want to improve their credit score should focus on paying off their debts as quickly as possible.
For many people, getting out of accumulated debt is difficult due to poor health or other circumstances. However, they might want to consider filing a Chapter 7 bankruptcy, which could erase all their unsecured debts, such as medical expenses and credit card bills.