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Remember to pay off high interest debt first!

As debt problems continue to engulf many families in the UK we are seeing more and more people making very simple mistakes when looking to improve their financial situation. One simple error which many people are making is not paying off the highest interest-earning debt first such as credit cards balances which can attract interest rates in excess of 20%. So what do you need to consider?

Before you look at potentially paying off any debt which you have we strongly recommend listing all of your debts, assets and income. Then investigate the interest rate that your debts are attracting and if you have any savings you should compare the two interest rates. If you are receiving a low interest rate on your savings but are being charged a high interest rate on your credit card debt then your money could possibly work harder for you by using a part of it to reduce your high interest debt.

That is not to say you should not retain some money set aside in the event of unforeseen circumstances but you should consider paying down as much high interest-earning debt as possible. It sounds very simple when you see it written down on paper but you would be surprised how many people overlook this simple and very effective technique!

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