The order to repay debts in, and why people argue about it

These are listed in the order worth acting on, which with debt repayment order is not the order they are usually presented in.

The two methods

Both pay minimums on everything and direct all spare money at one target. Highest rate first minimises interest; smallest balance first clears individual accounts faster. The difference in total cost is usually smaller than expected unless one debt carries a dramatically higher rate.

The gap widens with the spread between the rates and with how long repayment takes, so the cheaper method matters most on large balances repaid over years and least on small ones cleared in months.

Why the cheaper method is not always the better one

Research on consumer repayment has repeatedly found higher completion rates for the smallest-balance approach. Closing an account produces visible progress that a slowly falling balance does not.

The useful part is this: a method that gets finished beats a cheaper one that gets abandoned, which is the entire practical argument. The evidence here is behavioural rather than arithmetical, and much of it comes from self-selected participants, so treat the direction as supported and the size of the effect as contested.

A hybrid usually wins

Clear one or two small balances for momentum, then switch to strict highest-rate order. Anything at a punitive rate should jump the queue regardless of size.

Where it helps most, the ordering matters far less than the amount directed at it each month. Rates you did not choose can reorder the queue without warning, such as a promotional period ending or a default rate applied after a missed payment, so the list is worth rechecking every few months.

Stop the inflow first

No repayment strategy survives continued borrowing, and this is the step most often skipped. Freezing cards, removing stored card details and switching to a debit account for daily spending all reduce the friction of stopping. Where borrowing is funding essentials rather than wants, that is a different problem and needs advice rather than a strategy.

In practice, a small cash buffer does more to stop the inflow than resolve does, because it is what absorbs the boiler, the tyre and the vet bill that otherwise go straight back onto the card.

Where to get help

Free debt advice charities exist in most jurisdictions and can negotiate reduced payments, freeze interest and arrange formal solutions. Commercial debt management firms charge for services that are available free. Contacting a free service early is consistently better than contacting one late.

Where it helps most, credit repair firms are a separate category again and sell the removal of accurate adverse data, which nobody can do; only inaccurate entries can be disputed, and disputing them is free.

What the plan survives on

Any order works only while the minimums on every other debt keep being paid, because one missed minimum can trigger a penalty rate that undoes months of targeted overpayment. Automating the minimums and paying the target debt manually is the arrangement that fails least often.

Put simply, overpayments on some products are held against future instalments rather than applied to the balance immediately, so it is worth checking where the money actually lands before assuming it is reducing interest. Some fixed-term loans also charge interest for a notice period on early settlement, which is worth asking about before redirecting a lump sum there rather than at a card.

Everything above, in order of what to do first

1. The two methods. Both pay minimums on everything and direct all spare money at one target.
2. Why the cheaper method is not always the better one. Research on consumer repayment has repeatedly found higher completion rates for the smallest-balance approach.
3. A hybrid usually wins. Clear one or two small balances for momentum, then switch to strict highest-rate order.
4. Stop the inflow first. No repayment strategy survives continued borrowing, and this is the step most often skipped.
5. Where to get help. Free debt advice charities exist in most jurisdictions and can negotiate reduced payments, freeze interest and arrange formal solutions.
6. What the plan survives on. Any order works only while the minimums on every other debt keep being paid, because one missed minimum can trigger a penalty rate that undoes months of targeted overpayment.

The takeaway

Pick the method you will finish, stop borrowing, and get free advice early if it is unaffordable.

Pick the one that costs you least, and let the rest wait.