How to prioritise your debts - M4Money Credit Union

Struggling to make a decision on which debt to pay first?

It’s tempting to pay off the costliest debt first such as your credit cards. However, think about the consequences of not paying the more important ones first.

Therefore, always start by making a list of all the debts that you need to pay. Following this, categorise them into priority and non-priority debts.

A list of priority debts include:

  • mortgage repayments and loans secured on your home
  • rent
  • car finance and HP for furniture
  • logbook loans
  • gas and electricity bills
  • child support and maintenance payments
  • council tax
  • income tax, VAT and other tax debts
  • TV licence payments
  • Magistrates Court fines (not penalty fines such as parking)
  • certain payments ordered by the courts

Non-priority debts

Non-priority debts are those that are less serious however this doesn’t mean “safe to ignore.”

Some of these types of debts include:

  • credit card debts (including store cards)
  • catalogue debts
  • unsecured bank loans (including your overdraft)
  • payday loans and doorstep lenders such as Provident
  • water bills
  • loans from friends and family

If you have issues with debt, always seek debt advice. Some of the services that you can turn to include Money Advice Service; Debt Advisor Service; Step Change; Citizens Advice Bureau to name but a few.