Which Credit Card To Pay Off First? We Answer With 3 Options Ranked

If you’re struggling to get your cards paid off, you’re probably wondering which credit card to pay off first…

Updated February 2024
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Fact checked by Cathy Gresham

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Paying off your credit card can be super stressful.

In addition to mounting debt, you probably feel like you have a small army of people trying to give you advice.

And, people’s intentions aren’t always clear, you probably suspect some people are trying to take advantage of your situation.

Fortunately, we’re an expert, neutral party and we’ve got the answers.

We'll give you 3 solid options to choose from:

1. The Mathematically Optimal Solution [This is first because it’s our favorite and top pick]

2. The Psychology Hack

3. The Slow and Steady Wins The Race

We’ll also give you tips, tricks, and things you need to know to get rid of your credit card debt regardless of which option you choose. 

Along the way, we’ll let you know the pros and cons of each choice and which one is right for which different type of person.

1. The Mathematically Optimal Solution

This solution is pretty easy and straightforward and you’ve probably seen it recommended elsewhere, for good reason.

In order to pay the least of money in interest and get your debt paid down the fastest here’s what you do.

First, find out what interest rate you’re paying on each of your credit cards. You will be able to find this on your monthly statements or by calling your credit card company.

Next, rank your cards from the highest interest rate to the lowest. ?

Finally, attack the credit card debt starting with the highest interest card, by paying that card down fully. Don’t pay down the debt on the next highest interest rate card until you’re done with the one above it. Continue to systematically payoff cards in order of highest interest to lowest interest in full until you’re done.

Then, keep the habit of paying off all of your cards in full, every month, so you don’t get into this situation again! ?

While you’re doing this, remember to make at least the minimum payment on each of your other cards, before using excess money to pay down your debt. This will avoid additional fees and interest charges racking up and making the problem harder.

This option is the mathematically optimal one because it gets rid of the nasty compounding effects of high-interest rates the fastest. The high rates, that keep compounding, quickly turn into a mountain of debt that gets bigger and harder to climb.?

So what we’re doing here is credit card debt triage. ??‍⚕️

We’re dealing with the biggest problem first, then systematically working our way down in priority order.

You got this!

The key to remember with this method, when deciding which card to pay down in what order, is that you focus on how high the interest rates are, and don’t worry about how big the balances are.

Remember we’re attacking and getting rid of the highest-interest debt as fast as possible with this method, regardless of how big the balance is on each card.

24% is the average credit card interest rate

2. The Psychology hack

AKA the snowball method.

This is another solid option to choose from and one we like. Here we flip the script and instead of focusing on which card has the highest interest rate, we focus first on which card has the lowest balance. Yes, you read that right, the LOWEST balance. ⬇️

You start by paying off that credit card with the lowest balance, then work you’re way up in order, next paying off the credit card with the next lowest balance, and so on until you’re done.

So, like a snowball, you start small but continue to build momentum as you go. ❄️ ☃️

But wait, didn’t you say this was a psychology hack?

Yes indeed, the reason this method works, is that many people get frustrated by other ways of paying down credit card debt because they don’t see immediate results. For example, the first option we mentioned takes a lot of discipline, because it might take time before you start to really see the results. With this method, however, you start to see the results sooner.

Since you pay off the smallest balance first, you get an early win. You see that it can be done and your efforts are producing results.

So you gain some confidence and move on and feel like you can tackle the next largest card. ?

While you may end up paying a bit more interest overall with this method than with the first, we still think it’s a great option. That difference is well worth it if this method actually helps you stick to your plan and get it done. This is especially great for people who have struggled with money and feel frustrated. It gets you on the winning team!

This method has been scientifically validated by researchers from the elite Kellogg School of Management.??‍?

30-40% of consumers who have a revolving balance don't even realize it

3. The slow and steady wins the race

We’re just going to mention this method briefly because we don’t really recommend it.

You can also take the amount of money you have each month to pay down your credit card debts and spread it even across cards carrying a balance. 

While this is an option, it doesn’t really have any advantages, unlike the other two methods. 

With this method, you won’t pay the least amount of interest and you won’t get the psychological wins of paying down accounts/cards quickly. 

But, it is an option, and you could use it to slowly and methodically work your way out of credit card debt. 

3 more credit card pay-off tips to consider

1. Leverage a budget. 

We like to do what we call a reverse budget. Instead of guessing at how much you think you will spend or would like to spend, we look at the past few months of spending and write down what we’ve actually been spending in each category. ✍️

This way, it’s based on accurate data, instead of just guesses or hopes.

Next, if we’re trying to pay down debt, we rank our spending from highest to lowest. From there, we start to cut down or cut out what’s most discretionary, to create extra money to pay down that debt.

2. Consider a balance transfer to buy time.

Balance transfer cards can be a good option for giving yourself a little breathing room to pay down your debt. ?

You’ll want to examine the fine print of each card carefully, but most cards have a 0% introductory APR for 12-15 months and have a 3-5% balance transfer fee. Yes, it can be a little counterintuitive to open yet another card to get out of credit card debt. But, getting your balance into a product where it’s not costing you any interest for a period of time can create the space you need to pay it down, without the mountain of debt continuing to grow.

While you will have to pay that fee, it’s potentially better than paying the average credit card interest rate of ~24% over the next year. And, the fee is really only about 2-3 months of interest at that rate, so if you’re not going to pay off the debt before then, it’s a good deal.

3. It’s ok to ask for help.

Not everyone is a Personal Finance Guru – and that’s perfectly ok! Maybe you’re an expert in something else – great!

So, we think it’s totally ok to get some expert help and/or coaching. ??‍?

Just be a little careful, there can be a lot of bad actors in the debt paydown and consolidation industry.

There are some great people who genuinely want to help too. We suggest you start by heading to the non-profit National Foundation for Credit Counseling to find those. They’re a great resource. You can also try companies like Rocket Money (see our Truebill Review) which help you get ahold of and manage your monthly expenses.

Sources

  • Consumer Financial Protection Bureau 
  • Federal Trade Commission
  • Extensive professional experience in the Credit Card industry

Editor's Note:

At Personal Finance Guru, we want to help you maximize your lifestyle through personal finance. You can trust the integrity of our independent financial advice. Our opinions are our own and have not been provided, reviewed, approved, or endorsed by any advertiser or financial product provider. To support and grow the site, however, we may receive compensation from the issuers of some products.

Meet the Author:

Cody Beecham

Cody Beecham

Founder/Owner/Editor/Author

Cody is the founder and owner of Personal Finance Guru. His day job is as a management consultant at one of the Top 3 firms (think Mckinsey, Bain), where he advises Fortune 500 C-suite clients on their most important and pressing business problems. He completed his business education at Harvard Business School. 

After seeing the lack of personal finance education for regular people, Cody started the website with the mission to provide everyone access to information that will help them achieve their financial goals.

Cody approaches personal finance from a maximalist perspective, shunning typical advice around simply not buying a cup of coffee instead of more effective methods like investing in yourself to quickly grow your income. 

He believes in saving money and investing for the future, but he also knows that you need to enjoy life today. That’s why Cody approaches money with a sense of humor and a positive attitude. He knows that if you’re not having fun while you’re growing your wealth, then what’s the point?

Cody approaches life with the same gusto that he brings to personal finance. He loves to travel and experience new cultures, and he is an avid reader and learner. He also enjoys playing sports (especially tennis) and spending time with his family and friends.