Which Debts To Pay Off First

When trying to pay off debt, it is not always a simple process. Not just because paying off debt is difficult in itself, but because many of us have multiple debts, and we must prioritise which to pay off. With that in mind, we take a look at an age-old problem. Which debts to pay off first.

Which Debts To Pay Off First – A Stressful Process

Paying off debt when you have limited resources (hence the debt) can feel like an impossible task, like fighting the tide. This is especially so when there is more than one debt. Multiple debts in multiple places can have a devastating effect on your state of mind. It is important therefore to plan to eradicate such debt, and do what you can. This will improve your quality of life immeasurably.


We have split the strategies that could see you pay off debt effectively into three different sections, as we believe these are the three best approaches to take. Which is best for you depends on your personal circumstances. What matters is you choose one and commit to it. Ride any bumps in the road and any obstacles placed in your way and persist.


Sit down and work out exactly what you owe, to the penny. Work out where the debt sits. Calculate the minimum repayments for each debt, how much interest charges are and thus how much extra you are losing on each debt by not paying it off. Now you’re in a position to start prioritising your debt.

Which Debts To Pay Off First – Small Goals

One approach is not to spread repayments, but focus on number of debts, and in reducing the number of debts you possess. This means you pay off the smallest outstanding debt first, then the smallest remaining debt and so on. The advantage of this is its effect on your motivation and state of mind. It can be a great boost to be rid of a debt altogether, however small. By reducing the number of debts, it can inspire and motivate you to keep going and pay off other debts. This is not a perfect system however, as it may mean paying off debts with lower interest rates than on remaining debt.

Prioritise Interest Rates

It is understandable why you may wish to pay off your smallest debts first, but this approach is more sensible, as it is financially more sensible and will save you money. And the more you save, the quicker you pay off all your debt.  This is a long-term approach in seeing the results before your eyes, but paying off debt often is. This allows you to target the debt on which you are losing the most money on via interest charges. By focusing on paying them off first, you are taking the quickest route to being debt free. You just require patience. It may also require a staggered effect whereby you layer your debt repayments according to the interest rates. Alternatively, you may wish to focus on one single card with the highest interest and pay minimum amounts on the other cards until that is gone. It would be sensible to do so.

Credit Scores

A few may decide to pay cards in order of usage, which can help your credit score improve at a quicker rate. But to be honest, this is the least advisable option for me. If you need to pay off debt, and have been stuck in debt for some time, your credit score should not be your primary concern. This is because you should not be looking to borrow further in the foreseeable future. Focus on paying debt, and your score will sort itself out in time.