QUESTION: Which loans are considered "expensive" and better to pay off first?

The category of expensive loans usually includes consumer cash loans, microloans from microfinance organizations, and credit card debt with an interest rate above 20-25 percent per annum. During periods of economic instability or low inflation, even rates at 10-15 percent can be considered burdensome for the family budget. It is precisely with the liquidation of such obligations that you should begin an active fight against debt load, as they generate the greatest financial losses on a daily basis.

Early repayment of such obligations primarily provides maximum financial savings in the long term. Every ruble directed towards paying off an expensive loan reduces the base on which the bank accrues interest, which significantly reduces the total amount of overpayment. For example, by closing a credit card with a limit at thirty percent per annum instead of a mortgage at eight percent, you free up significant resources for further building up savings.

To implement this strategy, it is recommended to compile a complete registry of all existing obligations indicating interest rates. Then you should direct all available funds to the early closure of the most expensive item, while continuing to make only mandatory minimum payments on the remaining loans. This approach allows you to minimize overpayment and get out of financial bondage much faster, acting rationally and consistently.