Conquering debt mountain is a big step towards financial freedom. Take a look at how you could pay down debt and turn your mountain into a molehill.

Know what you owe

The first step is getting your head around exactly how much debt you have. Write a list detailing:

  • What you owe
  • What the interest rates are
  • How much the regular repayments are.

Once you've got a clear idea of everything you owe, you can start thinking about how you want to pay down your debt.

Choose which debts to pay off first

There are a few different ways you could go about ditching your debt. What method you choose will depend a lot on your personality.

Ask yourself a few questions to work out what would make it easier for you to sleep at night:

  • Paying off high-interest debt first?
  • Paying off your smallest debt first and having one less to worry about?
  • Pooling all of your debts into one loan?

Focusing on high interest debt

If you baulk at the thought of paying high interest rates, then you might want to focus on your high-interest debt first.

Rank your debts from the highest interest rate to the lowest. Continue to make minimum payments on all of your debts and loans, but throw extra money at the debt with the highest interest rate.

Once the highest interest debt is paid off, then focus extra payments on the debt with the next highest interest rate, and so on and so on, until all of your debts are paid off.

Knocking off smaller debts

If you prefer the thrill of a quick win, you might prefer knocking off your smaller debts first.

List your debts from smallest to largest. Make minimum payments on all of your debts, except your smallest debt. Pay as much as possible towards your smallest debt. Once that debt is paid off, repeat the process on the next smallest debt. Continue doing this until you've cleared all of your debts.

Debt consolidation

If you’d rather deal with one larger debt than a bunch of smaller ones, then debt consolidation could be a good option. This is where you roll multiple debts into one loan – meaning you have just one regular payment at one interest rate to keep track of and manage.

Having one loan to manage rather than several debts might make life easier, but it won’t magic away your obligations. Use a personal loan calculator to get an idea of what your repayments might be, and if you’ll be able to meet them.

To get a debt consolidation loan, you’ll need to apply for a personal loan. Make sure you ask about all of the fees involved with setting up the loan, so you don’t get any surprises.

Balance transfer

If you think you could pay off your debt within a few months, a credit card balance transfer might be worth considering. This is where you transfer the balance from another bank’s credit card or a store card to a Kiwibank credit card and you’ll pay just interest on that balance for six months. That means more of your money will go towards paying down debt, rather than on interest.

But you need to be careful - after six months the interest rates will revert to our standard interest rates, so it's important to pay off your balance before then if you want to take advantage of low rates.

More than you can handle?

If you’re struggling to cover your minimum repayments then get in touch on 0800 113 355, we may be able to help. If you're going through financial hardship we may also be able to help you. See more about our financial hardship assistance and how you can apply for help.


This is intended as general information only. It does not take into account your financial situation and goals and is not personal advice. For advice about your particular circumstances please see your financial adviser.

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