More and more people are labouring under high-interest credit card debt every year. These high-interest balances virtually ensure that the principal will never be paid off entirely most of the monthly minimum is going to interest. But there is hope! Moving your high-interest balances onto a cheap credit card with lower interest rates can help you get out of debt.

And even after the introductory period is over, a credit card will still leave you in much better shape than your old, high-interest credit cards did. If you go from a 15% interest rate down to, say, a 7.5% interest rate, you will be able to pay your debt off in half the time or less, since credit card interest is compounding. This translates directly into money saved, sometimes a LOT of money saved.

Remember the minimum monthly payment on your credit card statement is usually just enough to cover interest, with just enough going to principle to allow repayment in 60 or 70 years.

Let’s look at a couple of real-world examples. Let’s say that you carry an unpaid balance on a high-interest credit card that averages around £2,000. After one year of carrying this balance you will have added £300 in compound interest. The second year you will end the year with an unpaid balance of £2,645. Years 3, 4, and 5 would have unpaid balances of £3,041, £3,498, and £4022. In only 5 years the amount you owe has more than doubled. As you can see, getting a credit card with a good interest rate is key to managing your debt!

Another way of looking at it would be from the standpoint of making your minimum monthly payments. This would mean that after 5 years you have paid the credit card company around £1500 in monthly payments, and your principle is still sitting at around £1833.

Getting a cheap credit card can help you avoid this rapid debt accumulation. An interest rate half of that 15% credit card would put the time to double your debt at ten years; much more importantly, if you keep making payments in the same amount you do on the 15% interest credit card you will pay off your principle-and this is the key to lowering your debt. With lower principle comes lower interest charges; this leads to faster principle repayment.