Which Credit Card Should I Pay Off First? (2024)

When you’re drowning in credit card debt, deciding which card should be paid off first can be a difficult choice. Other questions may also arise when trying to climb out of debt. How long do I have to do it? Will paying off one card over another affect my score differently? Should I pay them all down evenly? Will my credit scores rise instantly?

How To Calculate Which Credit Card To Pay Off First

Traditional advice typically values paying off the card with the highest APR first. Your annual percentage rate (APR) refers to the amount of interest you’ll pay per year on the card. Card APRs range from as low as 6% to as high as 38% (yikes). Most will fall somewhere between 10% to 30%. Generally speaking, the traditional advice is true: If you have two card balances of the same amount, pay down the one with a higher interest first. This is sometimes referred to as the debt avalanche method.

But it’s not quite this simple. If you owe significantly more on a card with lower APR, you might incur much higher interest charges overall on the larger balance than you would with a small balance with a high APR. Though you should always pay the required minimum payments on all accounts to avoid negative impact to your credit, you should carefully compare the interest charges resulting from each carried balance. If short on the cash to pay both balances off completely, use whatever funds you do have to pay down whichever balance will cost you more to carry. It’s usually inadvisable to pay off cards equally unless rates and balances are similar.

You can use a credit card interest calculator to help you determine what payments will have what effect on a balance. Many issuers provide a chart on each statement showing what your balance and interest charges might be with a specific range of payments applied.

Which Credit Card Should You Pay Off First to Improve Your Credit Score?

Paying down any existing balance can help your credit score, but starting with the ones least likely to escalate into debt is likely your best option. When your debt spirals out of control and you’re unable to pay minimum balances on time, your credit can be negatively affected by late payment reporting. We never recommend carrying any balance if it can be avoided; always pay your bills in full and on time if you can afford to.

What Is a Credit Utilization Ratio?

Your credit balances influence your credit score in a few ways, but the most direct effect is on your credit utilization. Your credit utilization is a comparison of how much overall credit you have available across all revolving credit accounts and how much of this credit you’ve used. Utilization is expressed as a ratio or percentage, so that if you have $1,000 in total available credit and have balances totalling $200, your utilization is 20%.

Credit utilization directly impacts credit score. So much so, in fact, that your credit utilization may influence up to 30% of your credit score, depending on the model used. We recommend keeping your credit utilization below 30% in order to maintain good credit. Restricting your balances to below 10% of overall credit is even better for your credit.

What Else Can I Do to Pay Off Credit Card Debt?

Managing existing credit card debt when it’s too high for your income can be difficult, but with careful steps, you can avoid worsening your situation. The first step is to avoid additional unnecessary spending.

Reduce Spending

Try hard not to spend more money than you make. For many, a reduction in spending is not so simple. While reducing unnecessary spending may be easy for some, it’s hard to claim groceries or healthcare aren’t necessary. If you need to borrow money for essentials, consider a personal line of credit or another less-expensive financial product if available. Also consider consolidating balances using a balance transfer offer or asking your bank for a fee or rate reduction.

If you think you might have a spending problem because of oniomania or other issues, help is available and you should seek it—your situation can improve.

Transfer a Balance

If you have the credit, you may be able to buy yourself more time using a balance transfer. Applying for a card with a low introductory APR offer on balance transfers can allow you to move your balance from a card where you’d otherwise pay hefty interest to a card with a limited period of little or no interest. A balance transfer fee will likely apply and a regular APR will apply to any remaining balance at the end of the offer period, so do not make a balance transfer without carefully calculating its cost and creating a plan to pay the balance down at the end of the period. Check out our list of the best balance transfer cards.

Read More: Pros and Cons of Balance Transfer Credit Cards

Rate Reduction

If you don’t like the APR on an existing card, you can try to ask your lender to reduce it. If you have a history of on-time payments and your account remains in good standing, your lender may reduce the rate. It won’t always work, but if you’re in a pinch it may be among limited options.

Banks likely won’t do it for you often and you may need to prepare an argument as to why you deserve an exception. For instance, if you’ve diligently made on-time payments before and a check lost in the mail is the only reason your balance was paid late, a bank may be more amenable to waiving a late payment fee.

Bottom Line

Pay off cards with higher APRs or larger balances first. Determine exactly which card will cost you the most in fees and interest, then pay that card down until another card will cost you more. Always make minimum payments on time to protect your credit history. Additionally, your credit will benefit from a lower credit utilization rate—try to keep the amount of money you borrow at 30% or less of your overall available credit.