Which debt should you pay off first when you have extra money? The interest rate can make a much bigger difference than you might think.
If you have several debts, they may have very different interest rates. A debt charging 20% costs considerably more to carry than one charging 6%.
After making your required payments, putting extra money toward your highest-interest debt first can help reduce the amount of interest you pay over time.
Don't just look at your debt balance. Look at what each debt is costing you.
If you're learning personal finance for beginners, understanding interest rates, high-interest debt and debt repayment is an important part of managing your money.
Watch the full Understanding Debt lesson on Beginner's Personal Finance for a simple explanation of debt, borrowing and interest without complicated jargon.
📚 Continue the complete Beginner's Personal Finance course:
https://dailymotion.com/playlist/xd5y46
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