Reply to How to spend an unexpected student loan refund

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Put it all towards your highest interest rate credit card.[/quote]

She will never pay it off this way.

Pay off the smallest balances first, then when those get paid off dump that money into the next smallest balance.

Rinse, repeat.

The Dave Ramsey method is the one that works.

Making payments on the highest interest card first almost guarantees she will never make it out of debt.[/quote]

Mathematically, paying off the highest interest rates first means she/he will pay the least amount on the loans.  The Dave Ramsey method works best if the psychological boost of "yay!  I paid off one CC" is needed to keep the debtor motivated.  That is fine.  I know first had that paying off the highest interest rate works too, and saves money.  It was the approach I took to my student loans.  To each his/her own.  [/quote]

The Ramsey method works for people who lack discipline and need to see the immediate win (small balance paid off). If you’re disciplined enough to work to pay off the higher first it does save you money. But people in that much credit card debt obviously lack self control so that method works for the vast majority of them. [/quote]

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