On February 22, 2010, President Barack Obama signed new protections for credit card users into law. These protections prevent credit card companies from raising interest rates during the first year, except under certain circumstances, or from raising rates or fees without proper notice to card users. http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm The law requires card users to "opt in" to over limit fees and regulates the use of credit cards by cardholders under the age of 21.http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm

The new law also requires credit card companies to make their practices more transparent. http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm If you own a credit card (or several), you've likely seen a change in your monthly credit card statement. Credit card companies are now required to tell cardholders explicitly how long it will take to pay off their card balances if only the minimum payment is made. Card companies must also inform users how much interest they will pay over the course of that time period. http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm

If you're making minimum payments, or even if you try to pay more as often as you can, the fact remains that the sooner you pay your credit card balances in full, the less interest you'll have to pay. This page will give you information on how to pay off those balances and get out of credit card debt.

• Your first step is to assess exactly how much debt you have

• Take a moment to look at your debt. Here are some warning signs that you have a problem:
  1. Your debt totals 15 percent or more of your income.http://money.cnn.com/2008/01/03/pf/saving/toptips/index.htm
  2. You can't make the minimum payments.http://www.cnn.com/2008/LIVING/personal/02/22/financial.security/
  3. You have been borrowing from friends and family to make payments.http://www.cnn.com/2008/LIVING/personal/02/22/financial.security/
  4. You have used a lender with high rates that you normally wouldn't.http://www.cnn.com/2008/LIVING/personal/02/22/financial.security/
  5. You pay one credit card's bill with another credit card.
  6. You need to pay for essentials using your credit card.http://abcnews.go.com/GMA/Story?id=1921876&page=1
  7. You are unable to put any money toward savings.http://abcnews.go.com/GMA/Story?id=1921876&page=1
  8. You are lying to someone about your debts.http://abcnews.go.com/GMA/Story?id=1921876&page=1

• Next, you need come up with a budget. You need to create a budget that keeps you within your means and stops your reliance on credit cards.http://frugalliving.about.com/od/moneymanagement/tp/Get_Out_of_Debt.htm Don't worry if your budget exceeds your income at this point. That will be covered in the next step, Reducing Your Expenses.

• For this step, you will start by listing your fixed expenses, or the ones that are about the same each month such as your rent or mortgage payments. Then, list the variable expenses such as entertainment, recreation and clothing.http://www.daytondailynews.com/l/content/oh/index/living/money/creditcarddebt.html Make sure you list all your expenses, no matter how small. This will help you determine where your money goes each month.

• • For more information, check out Mahalo's How to Make a Budget.

• Now it's crunch time. You need to figure out how to reduce your living expenses. This may mean you have to make some sacrifices. Consider this your chance to find a way to live within your means and avoid future credit card debt. It can help if you try to categorize your expenses are "necessities" and which are "conveniences" or "other." Then, focus on reducing the money spent on necessities while cutting back on conveniences and other expenses. Your goal should be to keep your living expenses as low as possible, thus freeing up funds to pay off your credit cards.

1. Stop using your credit cards.
2. Resolve to only spend money on things you can pay for today.http://www.fool.com/personal-finance/credit/60-second-guide-to-getting-out-of-debt.aspx
3. Delay any purchases] that you can.[http://www.cnn.com/2008/LIVING/personal/02/22/financial.security/
4. Buy only the things you need and can't get elsewhere.http://www.kiplinger.com/features/archives/2007/10/kickdebthabit.html
5. Reduce your gift-giving budget and how much you eat out.http://www.bluesuitmom.com/money/family/debt.html
6. Avoid going to stores to browse.http://www.kiplinger.com/features/archives/2007/10/kickdebthabit.html This will help stop impulse buying.

• Mahalo has a number of pages that can help you reduce your expenses and save money located in the Finance How To section including:

• • How to Curb Your Spending
  • How to Cut Household Expenses
  • How to Save Money
  • How to Save on Your Energy Bill
  • How to Go Green and Save Money

• How to Get Better Gas Mileage
• How to Save Money on Food
• How to Save Money on Groceries
• How to Find Cheap Gas
• How to Be a Freegan

• Your next goal should be trying to reduce the interest charges you are racking up on your credit card. Remember when you calculated your debt back in Step 1? Pull it out and look at the different interest rates. You are going to need it for some of these steps.

Negotiate for a Lower Rate

• As the saying goes, "It doesn't hurt to ask." You best option to reduce your costs is to call the credit card company and request a lower rate.http://www.bizjournals.com/denver/stories/1997/07/07/smallb4.html

1. Explain that if you don't receive a lower rate, you will transfer the debt to another company.http://money.cnn.com/2005/12/12/pf/resolution3_debt_0601/index.htm Do It Now -- Get Out Debt
2. If your credit score is high enough, this should shave a few points off your percentage rate.http://money.cnn.com/2005/12/12/pf/resolution3_debt_0601/index.htm
3. It may also help to inform them that you are having difficulties making payments, as most companies will not want to write off the debt.http://www.studentfinancedomain.com/credit_cards/credit_card_debt_relief.aspx
4. Although this may make you uncomfortable, you need to stand firm.http://www.fool.com/personal-finance/credit/60-second-guide-to-getting-out-of-debt.aspx 60

• • For more information, check out Mahalo's How to Lower Your Credit Card Rates.

Open a New Account

• If you can't get a lower rate, or if you lowest rate is still quite high, you may want to shop around for a card with a lower interest rate.http://money.cnn.com/2005/12/12/pf/resolution3_debt_0601/index.htm Many cards offer low introductory rates.http://www.bizjournals.com/denver/stories/1997/07/07/smallb4.html Try to find cards that have the lowest introductory rate as well as low rates afterward.http://money.cnn.com/2005/12/12/pf/resolution3_debt_0601/index.htm

• • For more information, check out Mahalo's How to Get a Low Interest Rate Credit Card.

Move Balances Around

• Now you need to figure out if you can do any moving around. Transfer as much debt to cards that have the lowest interest rate.http://www.daytondailynews.com/l/content/oh/index/living/money/creditcarddebt.html Make sure you know if there is any charge for transferring before you make your decision.http://www.salary.com/personal/layoutscripts/psnl_articles.asp?tab=psn&cat=cat011&ser=ser035&part=par245 Also, beware of cards that offer low introductory rates that skyrocket after the promotional period ends, unless you can get the balance paid off before that point.

• Once you know how much you have, you can come up with a plan to reduce the debt. To start, plan on paying at least the minimum on every card you have. However, you can't afford to pay only the minimum on all your cards. If you do, it could end up taking you years to pay off the debt.http://money.cnn.com/2008/01/03/pf/saving/toptips/index.htm Your goal should be to pay as much as you can afford each month towards your debt.

• If you are paying off several cards, then there are a couple of different plans you can use to pay off your debt. However, they all amount to focusing your payments towards getting one credit card paid off at a time, while paying just the minimum on your other cards.http://www.fool.com/personal-finance/credit/9-ways-to-pay-off-debt.aspx You have two choices on which card to pay off first:
  1. The card with the highest interest ratehttp://abcnews.go.com/GMA/Story?id=1921876&page=1
  2. The card with the lowest balancehttp://allfinancialmatters.com/2007/02/20/dave-ramseys-snowball-method-vs-suze-ormans-method-for-getting-out-of-debt/
• Sometimes, these two may be the same. If they are not, then you will need to figure out which one will cost you the least amount of money. Two good tools you can use are CNNMoney.com's Debt Reduction Calculator or WhatsTheCost.com's Snowball Debt Calculator.CNNMoney.com: When Will You be Debt Free? WhatsTheCost.com: Snowball Debt Calculator Once you get one card paid off, funnel your payments into a second card.http://www.youcandealwithit.com/credit_card_debt/get_out_of_debt.shtml Repeat this process until all your cards are paid off.

• If you can't afford to pay the minimum on your cards, or if you want to speed up the process of paying off your credit cards, then it's time to look for some extra cash. There are several sources of money you may not have considered:

1. Borrow if the terms will be less than your credit card interest rates.http://money.cnn.com/2008/01/03/pf/saving/toptips/index.htm Sources of funds include:
   1. Friends and family.http://www.salary.com/personal/layoutscripts/psnl_articles.asp?tab=psn&cat=cat011&ser=ser035&part=par245
   2. A life insurance policy.http://www.fool.com/personal-finance/credit/9-ways-to-pay-off-debt.aspx
   3. A home-equity loan.http://www.bizjournals.com/denver/stories/1997/07/07/smallb4.html
   4. Your 401(k) plan].
2. Cash in any savings or investments you might have.http://www.salary.com/personal/layoutscripts/psnl_articles.asp?tab=psn&cat=cat011&ser=ser035&part=par245 Your credit card interest will be much higher than the interest you are earning.http://www.bizjournals.com/denver/stories/1997/07/07/smallb4.html
3. Sell any extra items in a yard sale.http://frugalliving.about.com/od/frugalliving101/tp/
4. Get a part-time job.http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/20WaysToMake100DollarsMoreAMonth.aspx
5. Change your withholdings on your W-4.http://www.kiplinger.com/features/archives/2007/10/kickdebthabit.html

The content in this page is not a substitute for professional financial advice. Please contact your financial advisor before using the information presented here.