"I pay a bit on each card"

If you've got two cards, or three, you'll have a way of paying them. A bit on each. The bigger balance gets a bit more. It feels fair, and it keeps everything ticking over.

John Gathergood, Neale Mahoney, Neil Stewart and Jörg Weber, in 2019, used linked data on people with more than one credit card to see how they divided their repayments. The money-saving thing to do is to pay the minimum on every card except the one with the highest interest rate, and put everything else on that one, because every pound there saves more interest than a pound anywhere else. Almost nobody did that. Instead, people spread their repayments across their cards in proportion to the balances. A card with sixty per cent of the debt got about sixty per cent of the repayment, whatever its rate. The researchers called it balance matching. It explained more than half the predictable variation in how people paid, it didn't get better when more money was at stake, and people did it consistently over time.

That's you, paying a bit on each. It feels fair because it's proportionate, and proportionate feels like the right thing, and it costs money every month, because the card at twenty-nine per cent is getting the same treatment as the card at eighteen, and the difference is interest you're paying for the sake of a feeling of balance.

The order that saves money is the dearest first. Minimum on every card, and every spare pound to the one with the highest rate, until it's at zero, and then the next. This is chapter 20's method and it's the single arrangement in this book that saves the most money, and it's the one the balance-matching habit is quietly preventing. You'll need the sheet from chapter 1 to do it, because the order depends on the rate column, and the rate column is the one nobody looks at.

Gathergood's finding is worth holding onto for a second reason. It means the way you've been paying isn't a personal failing. It's what nearly everyone does with several cards, and it's wrong in the same direction for everyone, and the fix is a piece of arithmetic and not a piece of character.