Which debt to pay first?

kirsty000

I have a few debts and im not sure which way to pay them off, is it best to pay the ones with the highest interest first or the lowest balances first? I dont have a good credit report so cant apply for a 0% interest card. Im wanting to just snowball my debts but dont know which way is best, interest or balance.

I have the following debts:

HSBC credit card £1000, aprox £20 interest a month
Barclaycard £400, aprox £6 interest a month
Zopa Loan £1500, aprox £10 interest a month
Great universal £400 interest free

Ames

Most people think it's better to pay off the higher interest ones first, as that'll save you money. But some people prefer to pay off the lowest balance first so that they can see the amount going down and it gives you a mental boost. I'd do the first option myself.

SunderlandBlackCat

General rule of thumb is Highest APR first as this saves you money in the long run but if you have a debt that can be tackled quite quickly then paying it off can act as a mental boost & spur you on a bit.

It all depends on what works best for your way of thinking.

SunderlandBlackCat

Ames wrote: »

Most people think it's better to pay off the higher interest ones first, as that'll save you money. But some people prefer to pay off the lowest balance first so that they can see the amount going down and it gives you a mental boost. I'd do the first option myself.

Bah, I really need to improve my typing

RAS

Hi

play with the snowball on www.whatsthecost.com, then you will understand and see how paying off the highest APR helps (unless it happens to be a fixed term loan with no option to overpay).

Quincifer

I'd say high APR first because it will work out better for you in the first place.
DEFINITELY leave great universal til last because it isn't costing you anything!
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