In a medium saucepan, combine sweetened condensed milk, white chocolate chips, and semi-sweet chocolate chips. Heat over low heat, stirring continuously for about 5–7 minutes until completely melted and smooth.

Remove from heat and stir in peppermint extract and optional red food coloring until fully incorporated.

Pour half of the fudge mixture into a parchment-lined 8x8-inch square pan and sprinkle crushed peppermint candies over it. Pour the remaining fudge mixture on top.

Using a knife, gently swirl the top layer with the bottom layer to create swirls.

Chill in the refrigerator for 2 to 3 hours or until set. Cut into squares before serving.