Get out of debt fast
The longer you take to pay off debt, the more it will cost you. So you should try to get out of debt as fast as possible.
Compound interest applies to borrowing too
Just as you get compound interest on savings, you PAY compound interest on the money you borrow.
Get rid of your high-interest debt first (such as credit cards and hire purchase). Next, see if you can increase your loan repayments to clear your other debt quicker. Be sure to check with your lender that paying off your debt faster won't result in penalty payments.
The faster you can get rid of your debt, the sooner you can start saving.
The Get out of debt calculator will help you to work out how to get rid of your debt faster.
Make a plan to reduce your debt
- Make a list of all your debts and the interest rate you’re paying on each one (the interest rate is in your loan agreement or credit card bill).
- Work out which debt has the highest interest.
- See if you can make bigger repayments to pay off this debt quicker.
- When you have paid off that debt, start paying more off the debt with the next highest interest rate.
Use the worksheet in our Managing debt booklet to make your debt repayment plan.
Do you have a mortgage?
Make the repayments as high as you can afford and shop around for the lowest interest rate. This will pay off your mortgage faster and save you money.
Do you have a student loan?
Student loans are different from most types of debt. If you are living in New Zealand, you won’t pay any interest on your student loan. This means you won’t owe any more money if you just repay the minimum amount.
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Work out how to pay off your debt faster
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Get smarter with your debt
