Many Americans struggle to pay down their credit card debts, a challenge exacerbated by the holidays when credit-card spending balloons. The Federal Reserve estimates that nearly half of U.S. households are unable to pay their credit card bills in full each month. These households owe more than $800 billion in card debt—an average of more than $15,000 per household spread across an average of four credit cards. To pay it down consumers must regularly decide how to allocate repayments, above minimum requirements, among their different accounts.

What repayment strategy is most likely to motivate them to get them out of debt? Should they disperse payments equally across all accounts each month or concentrate payment on one account? Our 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.

My colleagues Keri Kettle, Simon Blanchard, Gerald Häubl, and I obtained a large proprietary dataset from a financial guidance company, HelloWallet, which serves Fortune 250 companies and their employees. HelloWallet enables clients to track their bank accounts, including both savings and debt, to create financial goals and track progress toward those goals, and to receive customized financial guidance based on their salary, benefits, and spending behavior.

The anonymous data, spanning a period of 36 months, included monthly credit card information—spending, repayments made, and outstanding account balances for a total of nearly 6,000 HelloWallet clients, with an average of 2.5 credit card accounts. Presumably, indebted consumers who enroll with HelloWallet have the long-term goal of paying off their debt or at least managing their debts more effectively. We found that consumers who concentrated their repayments on one of their several accounts paid down more of their card debt than those who dispersed their repayments equally across multiple accounts.

With evidence that repayment strategy influences debt repayment amounts we conducted three experiments to investigate the psychological mechanisms underlying those results. The first was designed to investigate whether the effect of concentrating payments on a single account, versus dispersing them across many, increases motivation to work. Participants were given a beginning debt divided equally into five accounts and were told that they would first have to work to repay their debts so they could earn extra money toward the end of the experiment. They were randomly assigned to one of two repayment strategies: (1) pay off the accounts equally, with earnings in each period distributed equally among the accounts until they are paid off or (2) pay off the accounts one at a time. To earn money to pay their debts, they played an anagram-like game in which they generated words from strings of letters. Participants assigned to the concentrated repayment strategy worked harder than those who dispersed their repayments, producing more words and repaying their debt 15% more quickly.

In the second experiment, we tested the hypothesis that the one-account-at-a-time strategy led subjects to work harder and repay their debts more quickly because they feel they are making greater progress toward the ultimate goal of becoming debt free. In that study, participants who had been assigned to a more concentrated strategy – paying off one or a just few accounts at a time – did indeed perceive greater progress toward their goal of getting out of debt, which in turn enhanced their motivation to succeed.

In our third experiment, we set out to discover why the one-card-at-a-time repayment strategy increases subjects’ sense of progress, and what specific repayment strategy had the biggest effect on perception. We tested a variety of hypotheses and ultimately determined that it is not the size of the repayment or how little is left on a card after a payment that has the biggest impact on people’s perception of progress; rather it’s what portion of the balance they succeed in paying off. Thus 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. This aligns with other research on the power of small wins to keep people motivated.

These results have important implications for the millions of consumers who carry balances on multiple revolving debt accounts — and for the organizations that help them monitor or repay their debts. To the extent that a consumer’s debt accounts have similar interest rates, he or she should concentrate repayments first on the cards or accounts with the smallest debts, paying off those first. And unless it’s possible to consolidate those debts at a substantially lower rate, our findings would argue against pooling debts into a single larger one as this can actually be demotivating and could slow progress in repayment. “Pay the smallest debt first” is a straightforward strategy that can be easily communicated and easily applied—and that’s sorely needed by millions of American credit card users.