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Get rid of credit cards, thus debt

On your next credit card statement, you are going notice some changes that give you additional information that could help you understand all of the particulars on your credit card.

Credit card companies must now show you how long it will take you to pay off your balance if all you pay is the minimum payment. It will surprise many of you just how long it will take. Depending on the terms, it could be 30 years or more.

I like to refer to personal debt as the “bottomless black hole” that keeps people from reaching their financial goals. Here are a few tips to help you reduce your debt hole.

Call your credit card company: Try calling your credit card company and ask them if they could lower the interest rate and fees on your card. Most credit card companies, as long as you are in good standing with them, will allow you to lower your interest rate and fees if requested.

Shop for a new credit card company: Try contacting the bank you have other accounts with or a local credit union to see if they will give you a credit card at a lower interest rate than you are paying now, and then transfer balances to the lower interest rate card.

You may be offered an attractive rate online or through the mail. These introductory rates can be very low; be careful how long the lower rates last. Many card issuers will raise the interest rate significantly after six to 12 months.

Prioritize which balance to pay off first: If you have multiple credit card debts, focus on paying the highest interest rate debt first and the lower interest rate card last. By paying off the higher interest rate first, you will save money on finance charges and eliminate your overall debt faster.

Be patient in paying off your debt: You need to look long term when it comes to paying off debt. Depending on how much debt you have, do not expect to have everything paid off in a matter of months. These things usually take time. Keep a positive attitude and perhaps celebrate certain debt reductions – along the lines of treating yourself to dinner for every $1,000 of debt reduction. This will help you stay focused and reinforce that your plan is working.

Put away the cards: Finally, leave the credit cards at home. Develop new spending habits that allow you to spend what is in your wallet, not your future paychecks. Perhaps consider reducing the number of credit cards you have by closing out the ones that have unfavorable terms and interests rates.

Please pay attention to your statements. Not only verify that all the purchases are accurate, but pay close attention to the new information your statements have on it. Use this up front information to motivate you to eliminate the black hole in your financial life.

Sarah Rieger is a certified financial planner and member of the local Financial Planning Association chapter. Readers are invited to submit questions on financial planning to be answered in this space each Tuesday. Send questions to askaplanner@

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