When you're in debt, your finances can get overwhelming in a hurry. Just coming up with enough to make your minimum monthly payments on loans and credit cards can push you to the limit.

But you can escape the debt trap. You just have to go a bit further and find some extra money to pay down your debt. Once you do that, it's just a matter of time before you come out debt-free. Here are some easy steps to follow.

Step 1: Prioritize
The first thing you should do is to look at your bills and decide which ones are most important. Monthly living expenses like rent and utilities are mostly non-negotiable, although luxuries like premium cell-phone packages and digital cable are candidates for cutting.

With credit cards, it's easy to see which are important: The interest rates tell you. For instance, here are some recent rates charged by large credit card issuers:




Capital One (NYSE: COF)

Platinum Prestige


Citigroup (NYSE: C)

Personal Platinum


Wachovia (NYSE: WB)

Personal Platinum


American Express (NYSE: AXP)



JPMorgan Chase (NYSE: JPM)

Platinum Visa


Capital One

Standard Platinum


Source: Bankrate.com.

It's common to see huge differences in the rates you pay to different cards. You could easily be paying twice as much to keep a balance on one card as you do for another. And with rates changing all the time, it's something you have to check on with every monthly bill. Even cards issued by the same bank can have big disparities in finance charges.

Step 2: Negotiate
If you've got creditors bothering you constantly, you probably feel that you have no leverage at all. But in fact, you may be able to get your credit card company to reduce your interest rate, even if your credit isn't perfect.

There are two good ways to cut your rate. The first is the straightforward approach: Call your card issuer, and ask for a lower interest rate. Don't worry: William Shatner won't come after you with a phaser if you don't get the best deal possible. But every little bit counts.

The other way to get a better rate is through balance transfers and other introductory offers. For example, Discover (NYSE: DFS) and Bank of America (NYSE: BAC) are just two banks that offer 0% interest rates on balance transfers.

If you play your cards right with those offers, you can move credit card debt from one low-rate card to another for months or even years. But be aware -- many banks charge one-time balance transfer fees of up to 3% of the amount transferred.

Step 3: Snowball
Now it's time to start paying off that debt. After you make all your minimum payments, take whatever's left and apply it to your highest-priority debt. In most cases, that'll be the credit card with the highest interest rate.

This is called snowballing, because as you pay down your debt slowly, month after month, your progress will get faster and faster. Every extra dollar you pay means less in finance charges, letting you put that additional savings toward debt reduction. When that first card is paid off, it's one less minimum payment you have to make, so you'll be able to pay off your second card faster.

Step 4: Maintain
Once you get the hang of it, snowballing will start to feel natural. The only danger is making sure you don't get yourself back in trouble. Inevitably, some unexpected expense may threaten your plans. But don't panic. A financial emergency may set you back for a little while, but nothing can stop you from eventually getting yourself out of debt.

Don't let debt overwhelm you. While managing your credit can be difficult, you can get the upper hand on your creditors. With discipline, you'll count yourself among the ranks of the debt-free sooner than you thought possible.

More on managing your credit cards:

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Fool contributor Dan Caplinger has done his share of switching credit cards. He doesn't own shares of any companies mentioned in this article. Discover Financial is an Inside Value recommendation. The Fool's disclosure policy never snows you over.