Harvard Researchers Agree—This Is the Best Way to Pay Off Credit Card Debt

Updated 02/02/18

The only thing more common than fitness resolutions are financial resolutions, and for good reason: U.S. consumers collectively owe nearly $930 billion in credit card debt, with the average household owing more than $16,000. But as any debt holder knows, paying your balance down to $0 is easier said than done—not only does life tend to get in the way, but motivation and self-control are often in short supply.

But instead of paying down the accounts with the highest interest rates first, which basic math would tell you to do, Harvard researchers insist that consistently motivating yourself to pay down debts is more important. "People are more motivated to get out of debt not only by concentrating on one account [at a time] but also by beginning with the smallest," writes Harvard Business Review of the new research.

The study authors conducted three separate experiments regarding credit card repayment strategies to come to this conclusion. Ultimately, those who focused on paying off one account at a time, starting with the account with the lowest balance, paid off their debt the fastest. The researchers speculate that "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."

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