When to use it
Use it when you want to clear debt at the lowest overall cost.
How to apply it
- List all your debts with their interest rates.
- Keep paying the minimum on every debt.
- Put any extra money towards the debt with the highest interest rate.
- When it is cleared, add its payment to the next highest-rate debt.
- Repeat until all debts are paid.
Tip: If debts feel unmanageable, seek free, impartial debt advice before choosing a method.