Credit card debt can cost hundreds or thousands of dollars in interest per year. According to a new NerdWallet study, the average U.S. household with revolving credit card debt incurs interest charges of $904 per year. Here are five ways to reduce your interest costs significantly as you pay down debt:

Pay off your cards in order of their interest rates

If you have credit card debt on multiple cards, some personal finance experts recommend paying them off according to the size of the balance, starting with the smallest. The idea is that the quick wins will give you momentum and motivation. However, it will save you the most money to pay your cards off in order of their interest rates, starting with the highest rate card and moving to the lowest.


Make multiple payments each month

Credit card issuers assess interest based on your average daily balance, not your balance at the end of the month. Paying more than once per month — say, every two weeks — will reduce that average balance and, with it, your interest charges.

The earlier you pay and the more you pay, the lower your average daily balance will be. Consider making a payment each time you get paid.


Avoid putting medical expenses on a credit card

While unexpected — or even expected — medical bills might not fit into your budget, putting them on a credit card is rarely the answer. Doctors and hospitals will often help you set up an interest-free payment plan with reasonable monthly payments. Call your doctor or hospital’s billing department and ask about your options.


Consolidate your debt with a 0% balance transfer card

If you owe more than you can pay off in the next few months, signing up for a balance transfer card may be a wise move. When you transfer a balance, you move your debt from one card to another, usually one with a 0 percent interest rate for 12 to 18 months. Most cards will charge around 3 percent of your balance to move your debt, although a few cards have no such fee or waive it for a short time.

Get a low-interest credit card for future spending

If you consistently carry a balance, consider applying for a low-interest credit card for future spending.

If you expect to carry a balance only in the short term, look for a card with a 0 percent introductory rate and pay it off in full before that rate expires. If you think you’ll be carrying balances beyond 12-to-18 months, get a card with a low ongoing rate.