Rather than focusing on interest rates, you pay off your smallest debt first while making minimum payments on your other debt. Once you pay off the smallest debt, use that cash to make larger payments on the next smallest debt. Continue until all your debt is paid off.
What is the best way to pay off debt?
How to Pay Off Debt Faster
- Pay more than the minimum. ...
- Pay more than once a month. ...
- Pay off your most expensive loan first. ...
- Consider the snowball method of paying off debt. ...
- Keep track of bills and pay them in less time. ...
- Shorten the length of your loan. ...
- Consolidate multiple debts.
When paying off debts which should you pay first?
Option 1: Pay off the highest-interest debt first
This is commonly referred to as the avalanche method. Keep making the minimum monthly payments on all of your credit cards and loans, but put every extra penny you can toward the card or loan with the highest interest rate.
