The CARD Act of 2009 was congressional legislation designed to protect consumers and requires that your credit card statement chart how long it will take to pay off your balance if you only make minimum payments monthly and not add any additional charges to the account. It also must indicate how much you need to pay monthly in order to pay off the debt in three years. In addition, it must show the estimated total you will end up paying for either option you take. It's amazing to see how motivated one will become when seeing the amount of money saved by paying the three-year payment plan! By the way, from the time that the CARD Act was passed until it was enacted, some banks increased the minimum payment from 2 percent to 4 percent of the balance, thus decreasing consumer monthly cash flow.

Still, there are many, many "games" that the credit card companies play that can affect you financially. All of these "games" are legal, which is why it's so important to know the rules of the game. Like it or not, if you have credit cards right now—you're in the game.

Let's say you're the average American. You have a decent job, but you also have $8,000 in high-rate credit card debt. You have no savings to speak of. You worry about your money on a daily basis (in fact, it keeps you up at night), and you don't believe that $10 a day can dig you out if that hole. But it can, and in less time than you may think. If you get on this plan—and stick with it—in 3 years you'll be credit-card-debt-free.

According to Jean Chatzky in Pay It Down!: Debt-Free on $10 a Day, the key is to pay more than your minimum payment. By applying $10 a day against your $8,000 credit card debt (at an interest rate of 16%) you'll be debt-free in 33 months.

Debt Minimum Payment Interest Rate Years
$8,000 $160 per month*
($5 per day)
16% 30
$8,000 $300 per month
($10 per day)
16% 3

* If minimum payment is 2% of balance
Call your credit card companies, tell them you've got offers for cards at lower rates and ask them to lower your rate. If you've paid regularly, they are likely to negotiate. If the company says no, tell them that you will be closing your account this week and transferring your balance to a competitor who offers better rates. So there's no doubt about your seriousness, tell them the name of the competitor you have in mind. (It shouldn't be difficult to come up with a name, since you're probably constantly getting applications in the mail from credit card companies who want you to transfer your balances to them.) Ask to speak with a supervisor. Supervisors have the authority to give you a lower rate right then on the phone. In many cases, you can cut your rate in half simply by asking.

Not sure what to say? Follow Jean Chatzky's sample script:

"I have [name of card] with you and my interest rate is [X] percent. I received another offer in the mail from [other bank's name] for [X] percent, but before I take it, I want to see if you can lower my interest rate instead."

If the representative says they're not authorized to do that, you say:

"Look, you and I both know that if I transfer my balance today, next week your bank is going to send me an offer to come back at an even lower rate. Why don't you just save the bank the cost of that effort by giving me several points today?"

If the rep says it's not possible because your credit card is at a fixed interest rate, you say:

"Actually, that doesn't have anything to do with whether or not you have the ability to lower my interest rate. A fixed interest rate only means that my rate doesn't vary with fluctuations in the prime rate. In fact, the bank can raise it on my account at any time by just giving me 45 days written notice. And the bank can, if it chooses, lower the rate today."

If the rep still says they're not authorized to do that, you say:

"I'd like to speak to your supervisor."

Then speak to a supervisor and follow the above script again.

Download a printer-friendly script PDF
Interest Rates: Right now the average credit card in America has an interest rate of about 13 percent. But the fact is that credit cards today have interest rates ranging from zero percent to as high as 40 percent annually. Today pull out your credit cards and find out (by reading your statement) exactly what your debt is costing you. Then go to a website like or to look at competitive offers. Before you switch your debt to one of the low interest rate cards call your current credit card company and ask to have your rate lowered using the tips in the previous slide.

Late Fees: We've all been late on a credit card bill before. But today it's big business. Late fees range from $15 to as high as $39. And on top of that most credit card companies will up your interest rate on top of the late fee. It's reported that nearly a third of the credit card business revenue today comes from late fees. What many people don't know is that most credit card companies will waive your late fees, if you call and ask them to do so. If you know you may be late on a bill, call in advance and ask for a grace period. Ask the person you speak with to "document" your record, so you have proof you called in advance of the bill being late. If you really are late, call and ask if they can give you a break and waive your late fee. No matter what, make sure you ask for the customer service representative's name as well as their badge number or ID number so you can document your own proof of the call.

Teaser Offers: As mentioned earlier there are droves of credit card companies now offering "zero percent" credit cards. Many are offering zero percent for six months, twelve months, and twenty-four months. Some will offer zero percent on all debt that you move or consolidate to them. The secret is to read the "fine print". All of these offers have to legally share what the "catch" is. The catch on most of these offers is that if you are late just one time the interest rate can jump as high as 20 percent. If you're late two times it may jump up to 29 percent. So read the fine print closely. Also many of these offers charge you a "transfer fee" for debt that is moved (usually ranging from 1 percent to 3 percent with a variable maximum) of the amount transferred.

Annual Fees: Credit card annual fees can range from nothing to as high as $2500. Most credit card companies' annual fees range from $35 to $100 annually. Depending on the card, you may be able to get these fees waived, by simply calling and asking. Typically cards with frequent flyer programs or rebate offers won't waive the fees. Regular cards with no special offers often will waive the fees (especially if you're a customer in good standing).
When you have a lot of credit cards, figuring out how to pay them all off can be pretty daunting. Do you pay a little on all of them at once? Or should you concentrate on one card at a time? And if so, which one goes first? Follow these steps and your credit cards will be Dead on Last Payment—or DOLP™—for short.

The basic idea here is to reduce the amount of debt you're carrying on the credit cards you have as fast as possible. Why is this important?

  • The fewer credit cards you use, the better!
  • The more credit cards you have the greater the chance you have of being hit with late fees (up to $39 a month), over the limit fees (up to $35 a month) and annual fees on your cards that can range from $25 a month to $150 or more.
  • Getting the amount of cards you have paid off is a huge emotional boost. You'll see yourself make progress quickly!

Here's what you do:
  1. Make a list of the current outstanding balances on each of your credit card accounts.
  2. Divide each balance by the minimum payment that particular card company wants from you. The result is that account's DOLP™ number. For example, say your outstanding VISA balance is $500 and the minimum payment due is $50. Dividing the total debt ($500) by the minimum payment ($50) gives you a DOLP™ number of 10.
  3. Once you have figured out the DOLP™ number for each account, rank them in reverse order, putting the account with the lowest number first, the one with the second lowest number second, and so on.
  4. You now know the most efficient order in which you should pay off your various credit card balances. Take half of your Latte Factor® money and apply it to the card with the lowest DOLP™ number. For each of your other cards, you make only the minimum payment.
  5. Once a card is paid off, don't close it! Leave the account open so you have credit you are not using, which will help improve your credit score.
  6. Finally, ask the credit card companies to waive your annual fees on the cards you have, whether you use them or not. You should continue doing this until you've DOLPed your way to being debt-free!

Print David's DOLP™ chart! PDF  

You will need the free Adobe Acrobat Reader to view the contract. Download it here.

Step 4: How to cut back your spending

Get all of Oprah's Debt Diet advice
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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