Another popular method of reducing debt is transferring credit card balances to a card with a lower interest rate so more of your payment is applied to principal and less to interest each month. This only helps if you continue to pay at least as much as you were paying before, even though the minimum payment may be less.

Beware the Introductory Rate

Shop around for cards with low interest rates, but beware of come-ons that offer a low introductory rate and then take a big jump a few months later. If you haven't paid off the transferred balance when the rate goes up, you could end up paying more than you bargained for. Determine how long the introductory rate will last. Most are only good for five to nine months, so be very sure you can pay off the balance before then. Also be sure you don't miss a payment or pay late, because most issuers jack up the introductory rate sharply as soon as you falter even slightly on your payments. Finally, make sure that you qualify for the rate advertised. The 1.9 percent rate in the big bold print may be more like 10 percent for you, depending on your credit history. If anything is unclear after you've read the fine print, call the credit card company and ask questions.