By Allison Tait
MSN NZ Money writer
1. Stop using the card. The first step to blitzing debt is to stop adding to it.
2. Read your statements. Boring though this may be, they contain essential info like how much you spend and how much you're paying in interest. It's also the quickest way to find out if a mistake's been made on a transaction.
3. Pay more than the bank asks. Credit card 101: you will never get on top of your debt if you only pay the minimum monthly fee. A budget (again with the boring) will help you find extra cash. The fact is that it could take you 11 years* to pay off $1000 if you only pay the minimum. Add an extra $20 a month to your repayments, and you'll cut that to 3.3 years. Pay a flat $100 a month, and you'll have the debt done and dusted in a year.
4. Take a long hard look at your card. If you're having problems, chances are you're using the wrong one. Compare credit cards and find a better deal.
5. Beware of honeymoon rates. Balance transfer offers where you put your current balance on a new card at a lower interest rate can be a brilliant tool for paying off a debt. One word of warning: don't put anything else on the card during the honeymoon period or you will pay interest. It's very important that you close down accounts you're not using anymore just in case you're tempted to use them.
6. Read the fine print. Refer to the point above. The fine print is hard work but it outlines all the traps for inexperienced players. It's here you'll find the truth about interest-free periods. You must keep an eye on your statement days each month in order to take advantage of interest-free periods. Remember that if you don't pay off the balance in full before the due date, in the majority of cases you will pay interest on the full amount.
7. Forget rewards. Rewards cards carry hefty interest rates. If you're not paying the card off in full every month, those frequent-flyer points are costing you. Look for a no-frills, low-interest card instead.
8. The bank doesn't always know best. Research by the Consumer Action Law Centre in 2008 proves that, in spite of everything, people still trust that the bank has their best interests at heart. Don't let this be you. When you receive a friendly letter offering you a credit increase, tear it up. It's marketing, not benevolence. A creeping credit limit will not help you get on top of your debt.
9. Get organised. With late fees at roughly $25-plus and cash advances attracting big interest, it pays to make sure you (a) make your repayments on time, and (b) don't get caught short before payday. Take charge of your finances.
10. Have a plan. The biggest problem with credit card debt is that it seemingly has no end. You just pay a bit off, add a bit more, knowing you need to "sort it out" someday. If you're serious about slashing your debt, you need to get serious about a plan. Work out exactly what you owe and how much you need to pay each month for a set period you choose to get rid of it.
Allison Tait is author of Credit Card Stressbusters: Slash your credit card debt in 90 days (Wiley, $24.95).
* This assumes minimum payments of 2.5 percent or $10 (whichever is greater), interest charged from the day of purchase, and interest at 16 percent a year.