The Best Strategy for Paying Off Credit Card Debt

According to new research from the Harvard Business Review (HBR), prioritizing accounts with smaller balances, rather than those with higher interest rates, also known as the snowball plan, is the best strategy for paying off credit card debt.

[sam id=”1″ codes=”true”]

“Focusing on paying down the account with the smallest balance tends to have the most powerful effect on people’s sense of progress and therefore their motivation to continue paying down their debts,” writes Remi Trudel, one of the HBR researchers.

Although it makes more sense mathematically to pay down accounts that carry the highest interest rates first, the research suggests that people are more motivated to get out of debt not only by concentrating on one account but also by beginning with the smallest.