Myth 1: Cancel your credit cards.

Getting out of debt is all the rage. It's easy to fall into and hard to escape, but many millions of us are working on it. Here is one myth to be aware of in the pursuit of financial freedom.

Myth : Cancel your credit cards. By all means, pay off your credit card balance (or balances). If your credit cards have the sweet lure of the Muses and sing to you from your wallet, remove them. Cut them up, freeze them in baggies of water, or seal them in an envelope and give them to your mother. But please, please don't cancel a credit card that is still carrying a balance. If you do, the credit card company you owe money to will very likely consider you a high-risk account, and promptly raise your interest rate. The way they see it, if you cancel your card, you're on the brink of ruin. If you're in the process of repaying your debt, this is not the impression you want to make, especially if it's untrue. A better bet is to stop using the card, pay your bill on time for at least six months, and contact the customer service department directly. Ask them to reduce your interest rate; creditors can be refreshingly flexible and cooperative when they recognize a reliable customer. If you consistently pay more than the minimum and stop adding to the unpaid balance, you will get it paid off eventually. Then you can cancel the card. Or you can leave it in pieces, on ice in your mother's freezer.