This article is part of a series on credit card debt reduction strategies. Visit the links at the end of this article to read about other debt reduction strategies to find one that’s right for you.

Nobody wants to be in credit card debt, but sometimes digging your way out from under a mountain of debt can be discouraging. No matter how much money you pay, it feels like taking two steps forward and one step back when you see new interest charges counteracting your payments. There is a debt reduction strategy that can help you minimise those interest payments though. Today let’s talk about the strategy of eliminating credit card debt by paying off your highest interest credit card first.

Reasons to Consider Paying off Your Highest Interest Credit Card First

There is really only one reason for wanting to pay off your highest interest credit cards first, but it’s a compelling one: you’ll save more money!

Accumulating interest charges can make paying off credit card debt a painfully slow process. By knocking out your high interest credit cards first, you can hypothetically get out of credit card debt faster.

The Downside of Paying off Your Highest Interest Credit Card First

The thought of saving money by paying off high interest credit cards might be motivational enough for some people to stick to this kind of debt reduction plan. For others, it won’t be. It comes down to the combination of balances and interest rates.

If your highest interest credit card is also the one with the largest balance to pay off, psychologically you might not feel like you’re making progress quickly enough, so you might become discouraged and stop pursuing your debt reduction plan. On the other hand, if your highest interest card is the one with the lowest balance, it makes complete sense to pay it off first — you’ll not only save money on interest, but you’ll also pay off your smallest debt completely (and quickly). However, even if it is your biggest balance, you’ll potentially save a lot of money by paying off that debt first.

For example, let’s say you have a $3000 debt on your HSBC credit card with an interest rate of 16.49%, and a debt of $400 on your ANZ Low Rate MasterCard with an interest rate of 12.49%. If you paid off the lower interest card first, you would be paying off the higher interest card’s balance more slowly, which allows more interest to accrue.

Paying off your highest interest credit card first is theoretically the best way to get out of credit card debt while saving the most money. But a credit card debt reduction plan is only as good as your ability to follow through! If you’re the type of person who is most motivated by thinking about how much you can save, paying off your highest interest card first might be just the strategy you need.

If this credit card debt reduction strategy doesn’t sound right for you, that’s okay! Check out the other posts in our series to compare this plan with other debt reduction plans:

•    Pay Off Lowest Balances First
•    Pay Off Highest Interest Cards First
•    Flat Rate Credit Card Payments
•    Balance Transfer Debt Consolidations

Give these debt reduction plans a try, and you’ll be out of credit card debt before you know it!