How do I calculate which debt to pay off first?

18 July2021

If you have several debts you're in the process of repaying, you may be unsure about which debt to pay off first.

The simple answer is, there's no one-size-fits-all approach - it's a question of what you feel will work best for you.

If you're carrying a high-interest debt, such as a credit or store card, you may feel happier clearing that debt first, by making more than the minimum repayments every month. This could help you save quite a bit overall in interest - and you may feel more comfortable knowing you're paying off your most expensive debt first.

On the other hand, you may prefer the 'debt snowball' approach. When you're making overpayments, it can be hard staying motivated - so paying off your smallest debt first could help give you the determination to tackle all your other remaining debts, so you can put your borrowing behind you sooner rather than later.

We offer more advice on planning your way out of debt on this page.

Assessing your situation

If you want to work out which of your debts to pay off first, you should start by sitting down and reviewing exactly where you stand with your debts.

Work out how many debts you have, what types of debts they are, how much you have left to repay on each one, what the interest rates are, how much you're currently repaying per month - and whether any of them will incur an 'early repayment charge' if you overpay them.

Once you have this information at your fingertips, you should have a clearer picture of your situation - which should really help you decide on the best repayment approach for you.

You can visit our guide to debt help here.

Choosing an approach that's right for you

When it comes to repaying debts, choosing a pace that's manageable for you is vital.

After all, there's little point in doing all you can in a short space of time to pay off a debt if it causes you to struggle with other areas of your finances, such as keeping on top of your bills or other debts.

You may look at your debts and decide you can repay a couple of the smaller ones (e.g. a small loan or overdraft) pretty quickly. Repaying these could give you the motivation to keep going and repay all your other debts, so you can look forward to a debt-free future.

Remember: once one of your debts is gone, you should have more money to put towards your other debts every month.

If, however, you find you're struggling with your debts, you may need professional help. A professional company could help you find a suitable approach.

Try our debt solution finder

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