Here's How to Decide Which Credit Card You Need to Pay Off First

It can be very expensive to be in credit card debt. The average interest rate on credit cards is 21.47%, which means carrying a balance can leave you paying a fortune in interest. This is especially true if you have multiple credit cards with balances on them.

If you owe money to several credit card issuers, you'll typically want to focus on getting one debt paid down first by making extra payments on that card and paying only the minimum on others. But how can you decide which debt to repay first? Here's what you need to consider.

Consider consolidating your debt first

The first step in deciding which credit card to focus on paying off first is to determine if you really need to make this decision at all or if you can and should avoid it.

You could eliminate the problem of picking which card to repay if you consolidate your credit card debt. This could mean moving the balances from multiple cards onto one new balance transfer credit card. Or, it could mean getting a personal loan to pay off all of the cards you owe money on.

Balance transfer credit cards are cards with special promotional rates, like 0% APR for 15 months on transferred balances. If you can qualify for a balance transfer card with a large enough balance, you can move what you owe on your other cards over to it. You'll pay an upfront fee (usually 3% to 5%), but that's still likely going to be a lot cheaper than paying the APR on your current cards.

If you can move your money to a balance transfer card, you can throw as much extra money as possible toward paying that one single debt off -- and all of the money will go toward reducing the balance if you have a 0% rate. That can make payoff faster.

Likewise, if you use a personal loan to pay off multiple cards, you'll most likely end up paying a lower rate (the average personal loan rate is just 12.35%). And you can send as much extra money as possible to the personal loan so you pay down all your balances ASAP.

Consolidating using a personal loan or balance transfer won't work for everyone. You'll need good credit to qualify and should have a plan for paying off the balance and not charging more on the cards you freed up. But if you can do that, this eliminates the question of which card to pay off first and may make your payoff plan easier and more successful.

Think about how motivated you are

If consolidation isn't right for you, then you do need to decide which card to pay extra on. And the key way to do that is to consider how motivated you are.

If you are committed to becoming debt free ASAP, it makes sense to pay off the card with the highest interest rate first. This will save you the most money over time since you can get rid of those huge financing charges in the most time efficient manner. But if you have a bigger balance on that card, it can be harder to stay motivated.

If you aren't sure you're 100% excited about becoming debt free, it may make sense to focus on paying extra on your card with the smallest balance first. This can help you to score a win when you pay that balance down fast -- which has psychological benefits that could help you stay the course.

READ MORE: Debt Avalanche vs. Debt Snowball

By thinking about your motivation, you can decide which payoff strategy is likely to lead to success over the long haul. Once you've decided, set up extra payments for as much as possible toward the card you're focusing on and keep chipping away at the debt until you succeed in bringing the balance to $0.

Then move onto the next one until you're finally free from credit card debt. Once you've succeeded in paying off your credit card balances, you can begin using your money to benefit you, instead of making credit card companies richer.