Once you have a complete list of your debts, you should figure out how you want to pay them.
When it comes to the cost of debt, the best way to repay your debt is to pay off highest interest rate debts first. Rank your debts in order from highest to lowest according to interest rate. This is the order you’ll repay your debts.
As an alternative, you might consider paying off your smallest debts first. If your high interest debts also have high balances, you could end up paying on a single account for months before the entire balance has been repaid. Since smaller debts are repaid quicker, many people prefer to pay them first.
You should choose the method that will keep you motivated to pay off your debts. If optimizing your payments is most important, then the high-interest method is best. On the other hand, if you might become unmotivated by paying on a large debt for a long period of time, then the smallest debt method will be better for you. There may be one creditor you want to get rid of completely. In that case, pay off that credit card first. The goal is to order your credit cards and start paying them off.
