APR

An interest rate is the percentage charged on borrowed money or paid on savings over a period, usually expressed annually. On debt it sets how fast a balance grows; on savings it determines how quickly your money earns more. Knowing the rates attached to your accounts helps you decide which debts to clear first and where saved money works hardest.

A credit score is a number that lenders use to judge how reliably you repay borrowed money, based on your history of payments, balances, and accounts. A higher score unlocks better rates and easier approvals. While the score itself lives with credit agencies, keeping debts low and payments on time, which you can track alongside your budget, is what steadily improves it.

The debt avalanche method tackles debts by paying minimums on everything while throwing all spare money at the balance with the highest interest rate. Once that is cleared you move to the next highest, and so on. It minimises the total interest you pay and clears debt fastest mathematically, though it can feel slow at first if your costliest debt is also large.