Your credit card is like an old friend. Treat it well and it will be there for you in your time of need, making life easier. Treat it poorly and it will come back to bite you, becoming a huge burden and making you wish you never got involved.

According to ASIC, the average Australian has a total of $4,427.85 in credit card debt. If you can relate, it’s time to employ some tender love and care before things go really pear-shaped. Here, we tell you how to fix your troubled credit card and farewell debt.

Stop using your card!

It may seem obvious, but so is giving up chocolate to lose weight and most of us would agree that’s easier said than done. Break the cycle of using your card – cut it up if that helps – and learn to live within your means.

Petra Churcher, General Manager of IPAC South Australia, says that 54 per cent of Australians don’t know where their money goes. Devise a budget and devote time to figuring out what money you have coming in, and how much of it is going out each week.

Move your debt

RateCity CEO Alex Parsons suggests that you think of your credit card debt “less as a specific debt and more as ‘I owe some money, how can minimise the interest rate paid on that money?'”

A balance transfer is the simplest way to get yourself out of hot water quickly. This involves transferring your debt to another credit card in order to extend the interest-free period.

“Switch to a zero balance transfer card immediately,” says Mr Parsons. “This will buy you some time, approximately six to nine months, while you explore other options.”

Despite the fact that bills are issued monthly, credit card interest is charged on a daily basis, so it’s important to act quickly. Cut up your new card straight away so you don’t feel tempted to accrue even more debt.

Alternatively, you can also transfer your debt to an unsecured personal loan or your home loan, both of which offer better interest rates.

Repay

While consolidating debt can be helpful, Ms Churcher advises against putting all your eggs in one basket. Prioritising your debts and periodically paying them off can be just as helpful.

Set up a direct debit each payday so a portion of your earnings goes straight to covering your debt. It’s also important to always pay more than the minimum monthly repayment amount.

Money expert Michelle Hutchison from CreditCardFinder.com.au estimates that it would take over 22 years to pay off a $3000 debt with 17 per cent interest at the minimum repayment rate. You don’t want debt hanging over your head for that long.

Find lost money

Unless you’re already incredibly savvy, it is guaranteed that you will be unnecessarily losing money in at least one area. Take a look at your other financial products like your home loan or transaction account and try to find better deals.

Use comparison sites (like finder.com.au or ratecity.com.au) to compare products and refinance. Look for transaction accounts with no ATM fees or monthly account keeping fees and educate yourself about the best value home loans so you can negotiate your existing rate with your lender.

“Every little bit of money counts,” says Ms Hutchison, who also suggests going through your house and selling unworn clothes or unused furniture on Gumtree or eBay.

Delve into your savings

Don’t feel guilty about dipping into your savings to pay off debt; often the interest you’re paying outweighs the interest you’re earning in savings. However, Ms Hutchison suggests you continue to put money away while you eliminate debt, even if it’s $10 a month to make you feel more in control of your finances and to get you into the habit of saving.

Look into riskier options

If the above tips are failing you and you are losing money because of interest and fees, it’s time to explore liquidating your assets. Before you consider this last resort, make a visit to your bank or lender and ask for help.

“Most lenders want to help you,” says Ms Churcher. “Ask them to devise a structured way for you to pay off your debt keeping your cash flow in mind.”

Then, if this doesn’t work out, look at selling your car or home.

While it may feel like a drastic measure at the time, the sooner you eliminate bad debt the sooner you can start afresh and learn from your mistakes.

Start fresh

If debt is a recurring problem, consider giving up credit cards entirely and embracing debit cards. If this is not an option, Mr Parsons says it’s crucial that you pay your credit card off in full every single month.