Rank your debts in order from highest to lowest depending on interest rate. You should pay your highest interest rate debts first.
If you follow this order, your total payment will be less in the long run.
But most people prefer to pay those debts, having small balance, first. After you paid all small debts and ends up with a big amount debt; this may look like the stage achieved after consolidation.
Should I Pay the Highest Interest first
You should choose one method which is suited for you.
Paying high-interest debt first will lessen your total money drainage for sure.
On the contrary, paying off smaller-amount debts will pacify you more, because you could end up paying on a single account. This may take several months to pay. But you’ll be dealing with only one creditor. That is a kind of better thing.
Then again, as I said, choose the method depending on your debt amount and interest.
Don’t mix up interest and amount.
The first method is about paying the high interest first, not the high amount.
And the second one is about paying your small amount debts first.
Don’t forget the trade off between monthly payment and months, required to pay the money.
