Michael on September 20th, 2007
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I was interviewed for Tuesday’s CreditCards.com lead article Fed rate cuts and your credit card. As a result of the Fed’s decision to lower interest rates by one-half of a percent, many people will see a slight reduction in the rates they pay on certain debts – most notably, variable interest rate credit cards. But even for those who owe a lot on their credit cards, this is no big deal. Sure, while every bit helps and the rate cut will help borrowers, let’s be honest folks: for the guy who was paying 22.79% APR on his credit cart who now suddenly find that he’s paying only 22.29%, this is a big yawn.

If you have high interest rate credit card debt, your focus has to be on paying it off. Step one is to call your credit card company and try to negotiate a lower interest rate. Remember, while that credit card debt is ugly to you, in the eyes of the credit card company, you’re a rock star. They love you! They’re making lots of money on your account. You don’t like them; they like you. Sounds like an opportunity, doesn’t it? Use it to your advantage to get a lower rate. After your rate decreases, more of your hard-earned money can be put toward paying down the debt, not simply paying interest.

Lowering your rate significantly through a phone call can be a big step in the right direction for you and a great way to begin living Beyond Paycheck to Paycheck. A Fed rate cut? Hardly life changing for the typical borrower.

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