Maybe one of your goals for the New Year is to pay off credit card debt — either getting completely out of debt or at least making a big dent in your balance due. If that’s the case wouldn’t you like to know the fastest way to pay off your credit card debt? Well, we can tell you!

How fast you can pay off your total credit card debt relies on which credit cards you pay off first. In this case we have to assume that you owe a balance on more than one credit card and that the interest rates aren’t the same on all of your cards. You also have to have more money available each month than what you need to meet just your minimum payments. Paying only the minimum on all cards each month probably won’t get you out of credit card debt any time soon regardless of the order you pay your cards off in. And obviously the more you can pay overall each month, the faster you’ll get out of debt.

To start, make a list of your credit cards and your current interest rates on those balances. List them in order of interest rates, highest to lowest.

The Fastest Way to Pay Off Credit Card Debt

This is the order you’ll want to use when tackling your credit card debt. Pay off your highest interest credit card first. You would pay the minimum due on every credit card you have each month, and put the extra money you have available toward the highest interest card (in addition to its minimum payment). Then move down the line to the card with the next highest rate. Continue until all of your credit card balances are paid off in full.

Remember to consider only the active interest rates. For example, let’s say you have the ANZ Balance credit card which currently offers a 14.49% interest rate on purchases and a 2.9% interest rate on balance transfers for up to 12 months. If your balance is subjected to the purchase rate, use that rate when ranking your credit cards. But if your only balance on the card is a transferred balance and you still have 10 months in your 2.9% balance transfer rate offer, use that interest rate in the rankings instead. You would then re-rank your credit cards when that offer expires and your rate increases on the remaining balance.

Why is Paying off Higher Interest Cards Fastest?

The reason this works is simple — interest charges increase your balance against what you’re paying off. You pay off $xx per month and get charged $x in interest on the remaining balance. You take two steps forward, but one step back. The higher the interest rate, the bigger that step back is every month. To really get ahead you need to nix those high interest rates first. Lower rates do less damage to your total debt accumulation over time.

Problems with “Highest Interest First” Debt Reduction Plans

The “highest interest first” debt reduction plan might be the fastest option, but it’s not perfect. There’s one problem in particular. If your highest interest credit card happens to be one of your highest balance cards as well, it can take a while to see real progress by paying off your first card in full.

Sometimes people find it too hard to stick to a debt reduction plan if they don’t feel they’re making progress. They lose motivation. If you worry that will be the case for you, consider the snowball method to reduce your credit card debt instead. It’s similar, but you pay off the lowest balance cards first. That means you see progress faster and might stay more motivated to stick with your repayment plan. In the end, it’s about picking the best debt reduction plan for you and one that will ultimately lead to you getting out of credit card debt.