Tires are the most important part of handling, but you can't really cure oversteer/understeer with street tires. A rear sway bar is the simplest and most cost effective solution.
Understeer is caused by the fact that the front loses grip before the rear. A rear sway bar will actually help the front grip better by causing weight transfer. If your familiar with corner weighing, "wedge" or diagonal weight, it works on the same principle - regardless of how you change the corner weights, you cannot change the actual front/rear or side/side weight balance of the car.
The sway bar stiffens the rear, and causes *more* weight to be transferred to the inside rear to the outside rear, essentially by "lifting" the inside rear a bit. If you think of a 4-legged stool that has mismatched legs, this will also cause the load on the outside front to decrease. In turn, the outside rear and inside front carry the weight that was lifted from the other pair.
The net result is that by twisting the chassis at the rear, you transfer unused "reserve" grip from the inside rear to the inside front, which is really not doing much work.
Note that in doing this, you end up with a net loss of available cornering force in the rear that is larger than the amount you gain in the front (because you also lost a bit on the outside front), so compared to other methods (changing tires and wheel alignment/camber, adjusting weight balance, using a suspension design in the front better than lousy mcpherson struts), your total "theoretical" traction is lower. But since you are adding grip on the axle that is traction-limited, you are actually cornering better than you were before.
Another alternative is to add negative camber and positive caster in the front. Whatever you do, don't fix it by reducing camber in the rear, as that will simply reduce overall grip without adding any in the front.
Another side-note is that you can achieve the same thing by using stiffer rear springs - the roll stiffness they add is functionally identical to a sway bar (but it will change the front/rear roll stiffness and ride quality, which can affect braking and acceleration)
Quoting Hertz:
Cannot forget the #1 handling element: tires.