<prompt> Human: I know paying off a loan with high interest rate is logical, but my husband brought up a question that Im unable to answer.He has the following two student loan accounts:- Account 1: 2.2k at 3.4 AND 3.8k at 4.5 when he pays for this account, it deducts from the principal with the higher interest rate, that is the 3.8k at 4.5- Interest accrued last month: 25- Account 2: 1.3k at 5.6- Interest accrued last month: 7.7My husband said that since Account 2 has a lower principal, the interest he accrues last month is only 7.7, compared to Account 1 at 25. Since he has been paying both accounts equally each month, he wonders if he should just pay Account 1 a higher proportion instead so that Account 1 would accrue a lower interest amount?Assistant: The mathematically optimal way is to always pay the highest interest loan first. The balance is irrelevant.Human: Hello. This is said husband. Im still confused by that reasoning. I think I may have left out an important detail and I think that may be the cause of our confusion. My required monthly payments are always far less than what I actually paid. As such, Ive paid ahead so far that I wont technically have to make a payment until late 2015early 2016, but I still make a monthly payment out of habit to chip into the principle. I didnt even think much of it when I said it, but weve been discussing this for like a half hour and I still cant understand the reasoning. Since I dont have to make any mandatory payments, the only penalties Im taking is any accrued interest. So would it not make more sense to split my additional payments 8020 or something in favor of whichever account accrues more interest in a month rather than simply which one has the higher interest rate? Thanks for your time to explain this. Were honestly both just confused about both sides at this point. :p  <response>: As uwhiteraven4 notes, the only correct way to minimize interest is to pay in order of highest interest first and pay the minimum required on all other loans.If, hypothetically, the minimum payment on all loans were 0, you should completely cease payment on all loans except the highest interest one.According to OP, account 1 has 3800 at 4.5, but thats actually irrelevant. What you really have is 3800 separate loans; each loan is for 1 and has a 4.5 APR meaning that this 1 will generate 4.5 cents of interest by the end of the year. Similarly, account 2 has 1300 separate loans, also for 1 each, but these loans have an APR of 5.6.So if you had 100 to pay off some loans, would you pay off 100 of the 4.5 APR ones, or 100 of the 5.6 APR ones? 