Credit card crunch

Cards are not created equal. There can often be up to 10% difference in the interest rates charged. At a high 19%, you will pay $950 in interest on a debt of $5000 left on a card for 12 months. That’s without paying off any of your debt! Some cards have now started charging interest on interest, digging you even deeper into debt.

If this has happened to you, the best way is to clear it as quickly as possible. If it’s built up to the point where you can’t clear it within three months, it’s time to look at rolling over your debt.

Look for a card that offers new customers less than 3% interest on rolled-over amounts, and opt for the longest low-interest rate period on offer. Make sure that when the interest rate reverts to market rates, the rate on your chosen card is at the low end.

Roll all your card debt into the new card, and pay off as much as you can in that low-interest period. Start by comparing credit card offers at canstar.com.au.