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New year, less debt

By Marcie Geffner · Bankrate.com
Monday, January 10, 2011
Posted: 9 am ET

"Decrease debt."

That was the top choice of consumers who responded to a recent online poll about finance-related New Year's resolutions.

The poll was conducted in December by the National Foundation for Credit Counseling, or NFCC, a nonprofit based in Silver Spring, Md.

The respondents, who numbered more than 3,200, were given four possibilities from which to choose their top goal, and debt reduction was the clear winner.

The results:

• 69 percent of respondents selected "decrease debt."

• 18 percent chose "improve my credit score."

• 7 percent picked "decrease my dependence on credit cards."

• 7 percent opted for "increase savings."

Since credit cards are essentially a form of revolving debt for those who carry a balance, the goal of being less dependent on them is also a way of making debt reduction a priority.

While debt reduction may be a good goal for consumers, it's bad news for banks because a customer's debt is a bank's asset. Less debt, regardless of the format, means less interest charged and fewer fees paid.

That's not to suggest banks will stand by and watch their assets diminish. Rather, they'll be on the hunt for ways to increase their revenues through higher interest rates and fatter fees. Customers should be on alert.

The NFCC also suggested a few tips to help consumers keep their New Year's resolutions. Here's a summary:

• Define your objective. You're more likely to succeed if you focus on a narrow specific goal.

• Be willing to pay the price, even if you have to make significant lifestyle adjustments.

• Be prepared to ride out the inevitable setbacks.

• Be accountable to a supportive friend, family member or mentor.

• Celebrate your success. Anticipating a specific reward is a great incentive to stick to your plan.

So, what's your top financial goal for 2011?

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4 Comments
Debra James
January 11, 2011 at 4:57 pm

Every year we see articles about the upcoming year's resolution. I'd like to see a year-end recap of accomplishments, too. I believe that seeing stories about how many people actually achieved their financial goals would help other to achieve their own resolutions.

Raymond Navarro
January 11, 2011 at 2:42 pm

On Sept. 21, 2010, I opened a No Penalty CD online with my Bank. However, on Jan. 3, 2011, I requested it to be closed and requested that my funds be transferred to my checking account with another bank. It has been 8 days now and I still have not seen my funds with my other bank. Everytime I call the Bank,
they keep on extending the date when I will receive my money.
I already reported them to FDIC.