Which debt to clear first
When you owe money in more than one place, it’s tempting to either spread your spare cash evenly or throw it at whichever debt bugs you most. Neither is usually right. Clearing debt in the smartest order can save you hundreds of pounds and a lot of stress — and it comes down to two simple questions.
This is information, not financial advice. If you’re finding it hard to keep up with payments, please talk to one of the free debt-help services listed at the end — the earlier the better.
First question: which debts are dangerous?
Before you think about interest rates, split your debts into two piles. This is the step most people skip, and it’s the most important.
Priority debts are the ones where not paying has serious consequences — losing your home, your energy supply, or a visit from bailiffs. These come first, no matter what interest they charge (some charge none). They include:
- Rent and mortgage
- Council tax
- Gas and electricity bills
- Court fines and child maintenance
- Income tax, National Insurance and VAT
- Your TV licence
Non-priority debts are serious, but the consequences of falling behind are less severe and slower. These include:
- Credit cards and store cards
- Overdrafts
- Personal loans
- Catalogue debt and Buy Now Pay Later
- Money borrowed from friends and family
The rule: always cover your priority debts first. A 0%-interest council tax arrears bill is far more urgent than a credit card, because missing council tax can escalate to bailiffs and even prison, while the credit card just charges interest. Don’t let a noisy, high-interest debt distract you from a quiet, dangerous one.
Second question: which non-priority debts are most expensive?
Once your priorities are handled, turn to the rest. Here, the goal is to pay the least money overall — so you tackle the debts charging the most interest first. There are two popular methods.
The avalanche method (cheapest). Pay the minimum on everything, then throw every spare pound at the debt with the highest APR. When it’s gone, roll that money onto the next-highest, and so on. Because you’re always killing the most expensive interest first, this clears your total debt for the least money. An overdraft at ~39.9% or a store card at ~29% would usually be top of this list — ahead of a typical credit card.
The snowball method (most motivating). Pay the minimum on everything, then attack the smallest balance first, regardless of rate. You clear whole debts quickly, which feels great and keeps you going. It costs a little more in interest than the avalanche, but for many people the psychological wins are what actually get the job done.
Which should you pick? If the numbers motivate you, use the avalanche — it’s mathematically the cheapest. If you need quick wins to stay on track, the snowball is a perfectly sensible trade: a bit more interest in exchange for momentum you’ll actually maintain. The worst method is no method — spreading spare cash thinly clears nothing.
Compare the two on your own debts. Add what you owe and what you can pay each month, and see which method clears them soonest and which costs least in interest:
A shortcut worth knowing
If most of your expensive debt is on credit cards, a 0% balance transfer can switch off the interest entirely for a couple of years, so your payments clear the balance instead of feeding interest. It pairs perfectly with either method — freeze the interest, then snowball or avalanche what’s left.
Whichever route you take, the single biggest lever is paying more than the minimum. Our calculator shows exactly how much time and interest even a small extra payment saves.
See the difference paying more makes →
If you’re struggling, get help early
None of this applies if you simply can’t cover the essentials. If that’s you, the most important step is to reach out — today, not in three months. These services are free, confidential and used by millions:
- StepChange and National Debtline — free debt advice and managed plans.
- Citizens Advice — free, in-person and online help.
- Breathing Space — a government scheme that can freeze interest, fees and enforcement action for 60 days while you get advice, giving you room to sort things out.
Asking for help isn’t failure — it’s the smartest move on this whole page.
Last checked 1 August 2026. This is general guidance on prioritising debts; your own situation may need tailored advice from one of the free services above.
Sources
Just so you know: this guide is information and journalism, not financial advice, and we don't recommend specific financial products. Your circumstances are your own — if you need personal advice, speak to a suitably qualified adviser. Information was correct at the "last updated" date above but things change; always check the linked primary sources.