The lower balance is easier to pay off. Giving you more freedom and a sense of accomplishment. Making it easier to stay on your plan.
I’ve heard it said that it’s best to pay off the loan with the smallest balance regardless of the rate for just that reason. It’s what I did. That said, I have a car loan and two credit cards. One (the costco amex) I pay off every month. I use it for the dollars. I got a $450 costco coupon this year. That is REAL money that comes in quite handy. The other card is a higher rate than my car payment. I’m paying it off first to improve my credit rating (Higher available credit) and I’m planning on building a house this year on my property. But even if I were not, I’d still pay it off first. The reason is that if things were to go south for us, we would have that available credit, as opposed to a paid off car. In such a situation I’d take the availability of the card, with a car payment, rather than a paid off car and a card with a high balance.
Sounds like good logic. Another angle is if things go bad a paid off car insures you have transportation. I did the credit card thing before and only dug myself a huge hole.
Credit cards are higher interest because they are unsecured. The company is trading risk for a higher payoff. So if that risk is realized then they can live with that as well.