Many of us have fallen into the trap of overindulging on our credit cards.
And who can blame us? We waltz through the department stores and they constantly tempt us with their seemingly never ending sales.
Clearance sales, Winter sales, January sales, it goes on and on.
The credit card companies rub their hands together with glee as we rack up higher and higher credit card debt at exorbitant interest rates.
So, how do we get out of this cycle of debt, apart from wearing blindfolds each time we take a trip to the local shopping mall? Well firstly, we can try ridding ourselves of our out-of-control credit card debt.
Here's how we do it.
Transfer other outstanding balances into the one card The first option you have in reigning in your credit card debts is to consolidate all your credit card debts into the one credit card.
Many people have more than one credit card these days, and this can prove to be a real trap.
Remember this, the credit card companies crave our business, and we can take advantage of this fact.
How? By taking advantage of the credit card companies' offers to transfer our other balances into the one card.
At some stage, you have probably received an offer from a credit card company (whether you hold one of their cards or not) to transfer your existing outstanding credit card balances into their card.
They usually make this process as easy as possible for you and they entice you by offering a low, or even nil, interest rate on the transferred balance.
This special rate may be for a specified period such as six months, or it may be on the life of the transferred balance.
By doing this, you can drastically reduce the amount of monthly interest you are paying on your outstanding balances.
Of course, this will only work if you remain disciplined and limit your overall spending.
If you continue spending on your credit card the way you were previously, then you will likely end up in the same boat again.
Consolidate your credit card debts into a personal loan We all know that credit card interest rates are high.
In fact, they are usually much higher than most other forms of credit.
This provides you with an opportunity to reduce your total interest repayments by consolidating your credit card debts into a personal loan with a much lower annual interest rate.
Shop around for the cheapest personal loan you can find and then use the loan to pay off your outstanding balances on all your credit cards.
Don't fall into the trap however of starting to accumulate debt again on your credit cards.
Either use the opportunity of a clean slate to pay the balance in full each month or cut up your cards if you don't trust yourself.
If you don't do this, you'll find yourself in an even worse situation down the track.
Consolidate into your mortgage If you have a mortgage, you can take advantage of the even lower interest rate in much the same way you do with the personal loan.
Consolidating credit card debt into your mortgage is the most effective way of reducing your interest repayments and making your repayments more manageable.
There are however, two things you need to be aware of here.
Firstly, as is the case with the two previous consolidation methods, you need to control your future credit card spending.
Secondly, try to pay more off your mortgage each month.
So, if you were previously paying $200 off your credit card each month, try to continue paying this amount extra on your mortgage.
If you don't, you may end up paying even more in interest over the longer term because of the much longer term of the home loan.
Consolidating your credit card debts can really help you get ahead with your financial situation, but only if you curtail your future credit card spending.
If you go back to your old ways, you will find yourself in deeper fiduciary trouble than what you are in now!