Pay Off The Highest Interest Rate Debt First
It’s pretty rare that people who are in debt only have debt from one source. What’s more likely is that they have credit card debt, student loans, home loans, card loans, and other debts from a variety of places. With the money you’re paying out to each institution each month, it can be hard to know which one to focus on. However, if you’re wanting to pay less interest, Payoff.com recommends paying down the debt with the highest interest rate first. In general, car, home, or student loans have lower interest rates than credit cards, so that’s likely where you should be focusing the majority of your finances to minimize the amount of interest you’ll have to pay over the life of your debts.
Make Payments Every Two Weeks
Although some institutions won’t allow you to make more than one payment each month, if you have the option to do more than this, Carrie Smith, a contributor to the Huffington Post, suggests making payments every two week rather than just once a month. By doing this, less interest will accumulate each month because the principal will be getting smaller as the month goes on. Also, you’ll end up making an extra payment during the year, which could save you a lot over the life of your loan. And depending on how often you get paid, it may be easier for you to remember to send off a payment with each paycheck you get rather than trying to remember each month.
Consider Consolidating Your Debt
If you have so much debt that managing it is overwhelming, Brooke Niemeyer, a contributor to Credit.com, advises trying to consolidate all your debt into one place that has a lower interest rate than some of the individual rates you were paying. While it’s unlikely that you’ll get a 0 percent interest rate, even a slightly better interest rate than the one you had previously will save you money on the payback and help you get out of debt faster than you otherwise could have.
To save money on the interest payment of your debts, use the tips mentioned above to begin making some positive changes today.