Reduce loans by paying off credit card debt with biggest interest rate first

Tue, 29 Mar 2011

People with credit card or personal loan debt are advised to clear the ones accruing the highest interest rate first.

Sarah Pennells, editor of Savvywoman.co.uk, recommends looking at the different rates of personal loans, credit card and store cards as people could save money by clearing the deficit which charges the most. She explained: "That way your money is working harder because you are spending less time building up the debt on the highest interest rate."

Ms Pennells added that many people are drawn to paying off the loans or cards with the smallest interest rate first but she advises against this, saying by recompensing the higher rate they are likely to reduce the amount of money they owe. She also suggests people try to pay off their debt quickly to stop their financial problem getting worse.

According to the Saga price indices released recently, 21 million people over the age of 50 face higher inflation than the rest of the nation.
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