Credit cards, loans or your mortgage: what should you pay off first?

June 13, 2026 — 5:01am

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I received a reader question during the week worth a whole column. It read: “I have a terrible credit card with a debt from a holiday I foolishly put on it a couple of years ago. I also have a personal loan, for my car, and a mortgage that’s far bigger than I would like. I’m a bit overwhelmed – where do I start trying to pay off my debts? And how will I ever begin to get ahead when I feel so behind?”

The question may well speak to you, too. Indeed, to many people. The answer goes like this.

The mathematical winner. The various amounts of your debt don’t factor into which one you should prioritise as much as the interest rates on them. Personal finance wisdom has long held that you should attack your debts in interest rate order, from the highest rate to the lowest.

This would usually make it a pretty clear-cut proposition: priorities one, two and three are your credit card/s, at a typical 18 per cent, your personal loan/s at perhaps 11 per cent, and then your mortgage at, say, 6.5 per cent.

Looking at that another way: you repay those debts, you save interest at that rate. And that’s what makes it mathematically smarter to repay debt than........

© Brisbane Times