Paying off debt: smallest first or most expensive first?

Two methods, both work. The best one is the one you will keep doing.

An open wallet with cards on a wooden table

There are two popular ways to pay off several debts. Both start the same way: pay the minimum on everything, then put every extra rand on one debt.

Most expensive first

Put the extra money on the debt with the highest interest rate. You pay the least interest overall. This suits people who are motivated by the numbers.

Smallest first

Put the extra money on the smallest balance, whatever its rate. You clear a debt quickly and feel the win. This suits people who need to see progress to keep going.

Which one?

The difference in cost is often smaller than people expect. The method you will still be following in six months is the right one.

General information, not advice

This article explains how things work. It cannot know your situation. For a big decision, speak to a registered financial adviser.