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Dealing with Credit Card Debt in a Rising Rate Environment

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The Federal Reserve raised the fed funds rate a quarter point to 1.5 percent on December 13, 2017, marking it the third increase in 2017 and the fifth increase since the market crashed in 2008-2009. The intention behind the original cuts to the federal funds rate after the market crashed was to increase liquidity, boost employment, and spark inflation. The Federal Reserves has come too close to what they set out to accomplish within the American economy, so now they have begun raising rates.


While the economy hasn’t reached the feds stated target of 2 percent of inflation yet, we are pretty close and it can be too dangerous to wait too long to raise rates because if inflation takes off it is hard to get a handle on it. The Federal Reserves insinuated there will be two to three more rate hikes this year. When the Federal Reserve increases interest rates, your credit card debt becomes more expensive. Since these rate increase real-world effects on consumers and businesses it’s important to stay on top of your finances. However, there are ways to reduce or eliminate credit card interest.

Personal Loans

If you are faced with the burden of credit card debt like so many other Americans, one way to deal with rising rates is personal loans. More and more, I have been seeing people borrowing (personal loans) with lower rates to deal with their credit card debt. In other words, they are using the borrowed money to avoid paying high interest on their credit cards, even though the borrower will still have to pay back the personal loan rate. Dependent upon what credit card rate you have and what personal loan rate you can get and the terms of the loan, this can be an effective way to avoid skyrocket credit card interest. Personal loans come with fixed interest rates, which means if the Federal Reserves does another hike in interest rates, you will not be subjected to paying a higher rate, unlike most credit card contracts.

So, what will be an indicator of how good of a rate you will get on a personal loan? Drum roll, your credit score. Your credit score is essential in determining if you are a trustworthy borrower or not. Since, personal loans are unsecured debt the loan doesn’t require you to use an asset as collateral.

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However don’t be fooled, if you go into default the lender can take legal actions against you. It’s also important to watch out for scams, especially if someone approves you with a bad credit score or someone who approves you without checking your credit history. It also may be easier to get approved for a personal loan from a bank you already have accounts with.

"It’s important to watch out for scams, especially if someone approves you with a bad credit score or someone who approves you without checking your credit history."

Balance Transfers

Balance transfers, if done carefully, can be a successful way to eliminate high-interest rate credit card debt. Overwhelming credit card debt can disgruntle consumers which may lead to people choosing options which may appeal to them at first, but if they didn’t fully research only end up hurting them in the long run. Moving your credit card debt from a high-interest rate to a lower one can be appealing and effective for some but not everyone. Transferring your balance is only worthwhile if you can pay off the debt within the introductory low-interest rate window. Many time people transfer their balances to 0 percent interest rate cards but you have to be extremely dedicated to paying off your debt, with one missed payments some creditors can take away the promotional rate and they can charge you with retroactive interest.

If you decide to do a balance transfer paying down your debt has to be a priority otherwise your financial situation can spiral out of control.

Negotiating For a Lower Rate

Ask and you shall receive; sometimes just calling your credit card company and simply asking for a lower rate can work in your favor. Inform your credit card company that you have been exploring lower interest rate credit cards and are struggling to meet your monthly payments. Sometimes companies can be willing to work with you especially if you have some sort of hardship (illness, sudden loss of a job, etc.) If you are heavily buried in credit card debt, you may be able to negotiate a settlement to a lesser amount than your original balance.

Try to negotiate for new (lower) monthly payments over a longer term; offer to pay some of your bills in cash so they know you are good for the money.

Financial negotiating is a skill everyone should consider learning being that it gives you the potential to save a decent amount of money. If you make timely payments, have been a loyal customer, or have great credit use this as an edge in your negotiation. Keep in mind that you are giving your provider business- you are the customer. This can help when trying to reach a better rate, it can’t hurt to try.

When looking for ways to eliminate interest rates to pay down your debt, be cautious certain get-out-of-debt options could have you paying more. Regardless of the above-mentioned strategies, as rates rise, being in debt will cost more and more so consumers should do their best to adjust their budgets and avoid taking on more debt. Getting out of debt means coming to the realization that you need to make changes.

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Politics

Do 2020 Presidential Candidates Still Have Rules to Play By?

Not too many years ago, my advice to political candidates would have been pretty simple: "Don't do or say anything stupid." But the last few elections have rendered that advice outdated.


When Barack Obama referred to his grandmother as a "typical white woman" during the 2008 campaign, for example, many people thought it would cost him the election -- and once upon a time, it probably would have. But his supporters were focused on the values and positions he professed, and they weren't going to let one unwise comment distract them. Candidate Obama didn't even get much pushback for saying, "We're five days away from fundamentally transforming the United States of America." That statement should have given even his most ardent supporters pause, but it didn't. It was in line with everything Obama had previously said, and it was what his supporters wanted to hear.

2016: What rules?

Fast forward to 2016, and Donald Trump didn't just ignore traditional norms, he almost seemed to relish violating them. Who would have ever dreamed we'd elect a man who talked openly about grabbing women by the **** and who was constantly blasting out crazy-sounding Tweets? But Trump did get elected. Why? Some people believe it was because Americans finally felt like they had permission to show their bigotry. Others think Obama had pushed things so far to the left that right-wing voters were more interested in dragging public policy back toward the middle than in what Trump was Tweeting.

Another theory is that Trump's lewd, crude, and socially unacceptable behavior was deliberately designed to make Democrats feel comfortable campaigning on policies that were far further to the left than they ever would have attempted before. Why? Because they were sure America would never elect someone who acted like Trump. If that theory is right, and Democrats took the bait, Trump's "digital policies" served him well.

And although Trump's brash style drew the most handlines, he wasn't the only one who seemed to have forgotten the, "Don't do or say anything stupid," rule. Hillary Clinton also made news when she made a "basket of deplorables" comment at a private fundraiser, but it leaked out, and it dogged her for the rest of the election cycle.

And that's where we need to start our discussion. Now that all the old rules about candidate behavior have been blown away, do presidential candidates even need digital policies?

Yes, they do. More than ever, in my opinion. Let me tell you why.

Digital policies for 2020 and beyond

While the 2016 election tossed traditional rules about political campaigns to the trash heap, that doesn't mean you can do anything you want. Even if it's just for the sake of consistency, candidates need digital policies for their own campaigns, regardless of what anybody else is doing. Here are some important things to consider.

Align your digital policies with your campaign strategy

Aside from all the accompanying bells and whistles, why do you want to be president? What ideological beliefs are driving you? If you were to become president, what would you want your legacy to be? Once you've answered those questions honestly, you can develop your campaign strategy. Only then can you develop digital policies that are in alignment with the overall purpose -- the "Why?" -- of your campaign:

  • If part of your campaign strategy, for example, is to position yourself as someone who's above the fray of the nastiness of modern politics, then one of your digital policies should be that your campaign will never post or share anything that attacks another candidate on a personal level. Attacks will be targeted only at the policy level.
  • While it's not something I would recommend, if your campaign strategy is to depict the other side as "deplorables," then one of your digital policies should be to post and share every post, meme, image, etc. that supports your claim.
  • If a central piece of your platform is that detaining would-be refugees at the border is inhumane, then your digital policies should state that you will never say, post, or share anything that contradicts that belief, even if Trump plans to relocate some of them to your own city. Complaining that such a move would put too big a strain on local resources -- even if true -- would be making an argument for the other side. Don't do it.
  • Don't be too quick to share posts or Tweets from supporters. If it's a text post, read all of it to make sure there's not something in there that would reflect negatively on you. And examine images closely to make sure there's not a small detail that someone may notice.
  • Decide what your campaign's voice and tone will be. When you send out emails asking for donations, will you address the recipient as "friend" and stress the urgency of donating so you can continue to fight for them? Or will you personalize each email and use a more low-key, collaborative approach?

Those are just a few examples. The takeaway is that your online behavior should always support your campaign strategy. While you could probably get away with posting or sharing something that seems mean or "unpresidential," posting something that contradicts who you say you are could be deadly to your campaign. Trust me on this -- if there are inconsistencies, Twitter will find them and broadcast them to the world. And you'll have to waste valuable time, resources, and public trust to explain those inconsistencies away.

Remember that the most common-sense digital policies still apply

The 2016 election didn't abolish all of the rules. Some still apply and should definitely be included in your digital policies:

  1. Claim every domain you can think of that a supporter might type into a search engine. Jeb Bush not claiming www.jebbush.com (the official campaign domain was www.jeb2016.com) was a rookie mistake, and he deserved to have his supporters redirected to Trump's site.
  2. Choose your campaign's Twitter handle wisely. It should be obvious, not clever or cutesy. In addition, consider creating accounts with possible variations of the Twitter handle you chose so that no one else can use them.
  3. Give the same care to selecting hashtags. When considering a hashtag, conduct a search to understand its current use -- it might not be what you think! When making up new hashtags, try to avoid anything that could be hijacked for a different purpose -- one that might end up embarrassing you.
  4. Make sure that anyone authorized to Tweet, post, etc., on your behalf has a copy of your digital policies and understands the reasons behind them. (People are more likely to follow a rule if they understand why it's important.)
  5. Decide what you'll do if you make an online faux pas that starts a firestorm. What's your emergency plan?
  6. Consider sending an email to supporters who sign up on your website, thanking them for their support and suggesting ways (based on digital policies) they can help your messaging efforts. If you let them know how they can best help you, most should be happy to comply. It's a small ask that could prevent you from having to publicly disavow an ardent supporter.
  7. Make sure you're compliant with all applicable regulations: campaign finance, accessibility, privacy, etc. Adopt a double opt-in policy, so that users who sign up for your newsletter or email list through your website have to confirm by clicking on a link in an email. (And make sure your email template provides an easy way for people to unsubscribe.)
  8. Few people thought 2016 would end the way it did. And there's no way to predict quite yet what forces will shape the 2020 election. Careful tracking of your messaging (likes, shares, comments, etc.) will tell you if you're on track or if public opinion has shifted yet again. If so, your messaging needs to shift with it. Ideally, one person should be responsible for monitoring reaction to the campaign's messaging and for raising a red flag if reactions aren't what was expected.

Thankfully, the world hasn't completely lost its marbles

Whatever the outcome of the election may be, candidates now face a situation where long-standing rules of behavior no longer apply. You now have to make your own rules -- your own digital policies. You can't make assumptions about what the voting public will or won't accept. You can't assume that "They'll never vote for someone who acts like that"; neither can you assume, "Oh, I can get away with that, too." So do it right from the beginning. Because in this election, I predict that sound digital policies combined with authenticity will be your best friend.