Credit Basics

Now, if you're one of the lucky ones who actually get a lower rate, you may be tempted to make a lower minimum payment. Avoid this if possible. If you keep paying your usual amount, you'll pay off the credit card debt that much faster.

This ninth tip comes with a warning: You can actually save money by transferring balances on high interest rate cards to cards offering initial zero or low interest rates. But you have to read the fine print to make sure you're not going to end up spending more than you thought you'd save. These cards may be tricky. The fine print is filled with things like balance transfer fees, restrictions on use, and time constraints.

Each card has its own set of rules so be careful. Most of the low interest rates only last between six to nine months, a few for a year, but then they jump to double digits, averaging around 16 percent. Most of these cards charge a transfer fee based as high as 4 percent on the balance being transferred. Sometimes there's a cap that ranges from $25 to $50. However more cards are raising or eliminating that cap so if you transfer $5,000, you can expect to pay around $200 as a transfer fee.

Finally, some credit cards offering these low interest rates say they have the right to charge you a higher rate interest rate if your credit score is low and you won't even know it until you see your statement. That's why it's important to read the agreement-of-terms pamphlet carefully before transferring that balance. If it's still not clear, ask the credit card company -- or a trusted financially-smart friend -- to explain it to you.

Since the higher your credit score is, the lower your interest rates will be, work on improving your score. Your credit score tells lenders how responsible you are when it comes to your paying bills. If you've been late, or carry large balances on a number of credit cards, your credit score will be lower than if you make your payments on time and pay down your balances.

You can usually find out your credit score from any of the credit reporting agencies such as Equifax. Let's say your score is below 660, which is considered low. You may be able to raise your score by 50 points by going six months without a late payment and by paying down any large balances.

Now if you can't manage this by yourself, there are companies and non-profit organizations that can help you manage your debt such as Consolidated Credit Counseling Services. They help you construct payment plans you can live with as well as instructing you in how to apply for lower interest rates. They usually charge a fee but the fee entitles you to make only one monthly payment to the counseling service and that service makes separate payments to each of your creditors.

Don't just surf the Web and grab the first one that comes along. There are many scams and sleazy operators who will, sad to say, steal you blind. Just keep in mind that these services don't really do anything you couldn't do for yourself just by contacting the credit card companies directly and working out your own payment plan as well as requesting a lower interest rate. Most companies would rather have you repay them, even at a reduced rate, than not paying at all.

However, if you don't have the time, or you're reluctant to approach the credit card companies on your own, asking a legitimate service to help you work out a credit card debt repayment plan to manage your debt is better than ignoring the debt as it mounts and mounts to the unfortunate possibility of forcing you to have to declare bankruptcy or even default on your mortgage or car payments so that you lose your home, apartment, or car.