Prioritizing Interest Rates Is A Creative Method To Paying Off Debt

Woman in front of laptop
Shiavon Chatman
November 20, 2021

Paying off all your debt can seem impossible. Have you exhausted all your resources, but still find yourself in overwhelming debt? This payment method could provide relief. 

The basic idea is to pay off loans with higher interest rates – credit cards, payday loans, etc. – first. A high interest rate means the debt will cost you more in the long run, so if you prioritize those you can tackle lower-interest rate debt – like student loans or a car payment – afterward! Here’s how.

First, rank your debt in terms of interest rate from highest to lowest. Finding this information is super simple – you can check your account online or call the institution directly. After you’ve done this, it’s time to pay down some of your debt!

Next, make sure you’re hitting your minimum payments on everything – but pay as much extra as you can each month to the debt with the highest interest rate. Even a few extra dollars can make a big difference. 

When you’ve paid off your highest-interest form of debt, move down to the next one and repeat!

Getting out of debt is a crucial step toward financial liberation. And sometimes we have to get creative and intentional in order to make it happen!

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