Up to your neck in repayments? Not sure where to turn to try and get rising interest amounts under control? If you’re juggling a couple of credit repayments or loans at once, often you might feel like you have to do some financial gymnastics to take back control. There are tons of web pages and blogs with all sorts of wacky and wonderful ideas to get your finances in order, but TWiCE understands that there isn’t a one size fits all solution to getting ahead.
When it comes to paying off multiple debts at ones, and more specifically, credit card debts, there are two main ways of going about it:
Pay off the credit card with the highest interest rate first. The one with the highest rate is the one where you’re sending the largest amount of dead money. If you’ve got debts of the same amount but you’re getting charged more interest on one of them, it makes sense to pay off the one that will charge you more. Take out the biggest cash hog as soon as you can and you’ve got more to work with. The thing is though that in a lot of cases, if your multiple debts aren’t for similar amounts, committing more money to what is already your largest payment can sometimes be a bit tight cash wise. That’s why the other option is to address your smaller overall debts first.
Reduce your multiple debts and get debt free byo tackling your smaller amounts first. Sometimes you need to tackle the molehill before you think about scaling the mountain. Smaller amounts are often taking less overall in repayments, and that means paying extra into them can reduce the overall amount sooner rather than later. Once that smallest debt is paid off, you’ve then got the extra from not having to pay it any more to go towards the next amount. It has a flow on effect where you now have much more free cash to tackle your larger debt..
The thing is though, everyone’s situation is different and that’s why TWiCE believes even these general rules should be taken with a grain of salt. The best thing to do is to take stock of where you are at, speaking to people close to you, and maybe seeking a bit of help with what the smartest decision might be for you. If you’re keen to find out more about how you can overcome your repayments and get on the right track to financial freedom, it might be worth seeing how TWiCE can lend a hand.
- Tom L
Disclaimer: The above information does not replace financial advice. Please ensure you seek independent financial advice before making any decisions regarding your finances. We also recommend that you carry out your own research to ensure that this is right for your own unique circumstances. Please note that we sometimes link to other websites but we cannot be held responsible for their content.