Extra Cash: Which Debts Should I Pay First?


If you are used to paying the monthly minimums on all of your cards having extra cash or an increase in income is a wonderful thing. But which of your debts should you focus on paying down first?

The answer is that there is really no right answer.

Paying off any of your debts will help your credit immensely and reduce interest payments from snowballing. But there are some tactics that can make it easier to stay on track and keep that extra cash going to debt payments.

Pay Off The Lowest Balance First

To keep yourself motivated in paying off your debts focus on the card with the lowest balance first. If you do it this way you will feel a sense of accomplishment when that number reaches zero and be continuously motivated to move to the next card.

While there is no specific financial advantage in paying off debts this way it can have a positive psychological impact and keep you paying off those cards rather than spending away that extra cash. It's all about seeing the payoff come to fruition quickly.

Start With The Highest Interest Rate

If you don't need that extra motivator then you can start your payoff strategy by tackling the card with the highest interest rate first. By doing this you are getting rid of larger monthly interest payments, which will help you save more money.

If you pay off half the balance on a card that usually has a monthly interest charge of $100 then you are saving yourself $50 a month, which can help keep the balance lower and make your payoff efforts easier.

Start With The Highest Balance

If you have a card that is maxed out beyond all others another strategy is to start with that one. A card that is maxed out probably also has a pretty hefty monthly interest charge so chipping away at that is definitely beneficial.

This strategy, while sound, can be a little defeating since it will take some time to bring a high balance down. This route requires patience and the understanding that it will be worth the time it takes to get down to a manageable amount.


It may take some time but once you a card down to zero but once you do make sure you keep that account open. A card with no balance has a great impact on your credit utilization ratio. If you don't trust yourself to keep that zero balance simply cut up the card so you can't make any impulse purchases and consolidate spending to one or two other cards.

We're here to help you rebuild and understand your credit. Give us a call to get started or learn more about what we can do for you 1-800-431-0449.