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Earlier this year, we brought you the first two of twelve steps toward living a debt-free life.

The first step was to take stock of your debt by writing down exactly how much you owe to whom, plus information on payment amounts and interest rates. Put that information into a spreadsheet.

The second step was to assess your spending, and work hard on not incurring any more debt than you already have. Make sure you understand what you're spending, when and why. Then, make efforts to eliminate the spending that is putting you into debt, whether it's ordering carry-out too often, shopping online or something else.

Now, it’s time for the third step — and it involves your interest rates.

Interest rates are a percentage of your loan or bill that is charged by the bank. If a bank gives you a $500 loan, they will want you to pay back the $500 you borrowed plus a percentage to cover their costs from lending you that money.

Interest rates depend on a number of factors, including the type of the loan, the amount of the loan, your credit score, whether the loan is secured or unsecured and more.

When looking at your credit card debt, interest rates matter a LOT! If the majority of your outstanding debt is credit card debt, you may be spending hundreds of dollars on interest alone. Aside from wasting money, this keeps you from moving forward, paying off the principle and getting rid of your debt.

The good news is that your interest rate may be negotiable! Most people don’t know you can call up a credit card company and simply ask for a lower APR. (APR stands for annual percentage rate, and it’s the interest rate you pay every year on your debt.)

Take some time this month to call your credit card companies and ask for a lower APR. Explain that you are working on paying down your debt and that the interest payments are impeding your progress. You can even research competing cards and cite their interest rates in a bid for a lower APR from your current credit card company.

Lowering your interest rates will allow you to make another real step toward getting rid of debt by allowing you to pay off more of the balance every month and spend less lining the pockets of your credit card company!

Another way to effectively lower your interest rate? Consider a balance transfer. You may be able to open a new credit card that has a much lower APR than what you’re paying right now — some cards even offer special rates for balance transfers. Then, you can pay off your old credit card with the new credit card, and pay off the new credit card with a much lower (or nonexistent) interest rate.

For example, right now you can get a CommonWealth One Visa Platinum Rewards credit card with a 5.99% APR* on balance transfers for the life of the balance. When you transfer your old credit card’s balance, the rate will be as low as 5.99% APR*.

One thing you should know about balance transfers is that many promotional rates are usually just for a certain introductory, or temporary, period. Make sure you understand how long you have before that promotional interest rates jumps up. In the case of our Visa Platinum Rewards card offer, your rate will remain 5.99% APR* until the balance of your transferred balances are paid in full.

If you have questions, set up a telephone appointment. We’d be happy to talk to you about your options.


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