While credit cards are a handy source of credit, relatively high interest rates mean they can be very expensive if you fall into debt. Many credit card users get in the habit of only paying the minimum due each month and allow debt and interest charges to spiral upwards.

However, with a little discipline and a bit of savvy you can reverse this trend. Here are some tips on how you can slash your credit card debt and save yourself a lot of money.

Find a better rate

If you find yourself in a downward spiral of credit card debt and you cannot pay off what you owe anytime soon, it’s time to start shopping around for a better interest rate (APR). The APR dictates how much interest you pay on what you owe each month and, ultimately, how quickly your debt grows.

So, find out how much you pay on your credit card and research the market to see if you can find a card with a lower interest rate. If you shop around, the chances are that you will find a better deal.

In addition, many credit cards offer special introductory offers, such as no interest for six months. In some cases, these will also apply balance transfers from your current credit card so you could save yourself a lot of money in interest rate repayments, and give yourself a chance to clear some of that debt.

However, be aware of balance transfer fees. Many lenders charge a fee for taking on your old debt that could negate any money saved on interest rates, so be sure to do your maths before making a final decision. Also, be sure to compare credit card offers to ensure that you are getting a good rate of interest after the special introductory rate expires.

Clear your debt

Unfortunately, debt consolidation involves facing some hard facts. While lower interest rates and balance transfers will save you money, at some stage you will have to face facts and begin to pay off what you owe. If you have a large credit card debt it is not enough simply to make the minimum payment each month. At the very least you need to cover the interest so your debt does not continue to grow.

Ideally, though, you should be reducing the debt each month. It will take some commitment but the end result and reduction in financial stress will be well worth it. Try putting the money you save through lower interest rates and/or a balance transfer back into your debt to get it cleared as quickly as possible.

Keep a close eye on your spending habits

You need to put in place some good spending habits to be successful with debt consolidation and prevent ending up in the same situation in the future. If you still find yourself using your credit card to make purchases you should consider locking it away for emergencies. With a credit card in your wallet there is a constant temptation to spend - not what you need when you’re trying to get back in the black. Try switching to a Visa debit card rather than credit cards.

Avoid fees and charges

Most credit card problems come from failing to keep track of spending and treating credit card purchases differently from cash purchases as if it is not real money. One cause of the problems is spending beyond your ability to repay while another is not sticking to a credit cards rules and terms. Fees and penalties for exceeding your credit limit and failing to make the minimum monthly payment can easily add up to $50 each month, so avoid these at all costs.

Get a loan

If you have fallen heavily into debt and you are getting swamped by the high interest rate charges of your credit card, you could consider getting a term loan. It should only be considered after other options are explored but the lower interest rates for a fixed period if used well offer an opportunity to take control of finances. Some lenders may be reluctant to give you a loan considering the debt you have already built up, but if you have a clean credit rating and a decent income you should be okay.

Article by Richard of the Click 4 Group.

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