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Dealing with Credit Card Debt in a Rising Rate Environment

Career

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.

3 Min Read
Lifestyle

Tempted To Dial Your Ex: 5 Ways To Know Whether Or Not You Should Contact An Old Flame

Thinking of ringing up your ex during these uncertain times? Maybe you want an excuse to contact your ex, or maybe you genuinely feel the need to connect with someone on an emotional level. As a matchmaker and relationship expert, I was surprised at the start of the coronavirus quarantine when friends were telling me that they were contacting their exes! But as social distancing has grown to be more than a short-term situation, we must avoid seeking short-term solutions—and resist the urge to dial an ex.

It stands to reason that you would contact an ex for support. After all, who knows you and your fears better than an ex? This all translates into someone who you think can provide comfort and support. As a matchmaker, I already know that people can spark and ignite relationships virtually that can lead to offline love, but lonely singles didn't necessarily believe this or understand this initially, which drives them straight back to a familiar ex. You only need to tune into Love Is Blind to test this theory or look to Dina Lohan and her virtual boyfriend.

At the start of lockdown, singles were already feeling lonely. There were studies that said as much as 3 out of 4 people were lonely, and that was before lockdown. Singles were worried that dating someone was going to be off limits for a very long time. Now when you factor in a widespread pandemic and the psychological impact that hits when you have to be in isolation and can't see anyone but your takeout delivery person, we end up understanding this urge to contact an ex.

So, what should you do if you are tempted to ring up an old flame? How do you know if it's the wrong thing or the right thing to do in a time like this? Check out a few of my points before deciding on picking up that phone to text, much less call an ex.

Before You Dial The Ex...

First, you need to phone a friend! It's the person that got you through this breakup to begin with. Let them remind you of the good, the bad and the ugly before taking this first step and risk getting sucked back in.

What was the reason for your breakup? As I mentioned before, you could get sucked back in… but that might not be a bad thing. It depends; when you phoned that friend to remind you, did she remind you of good or bad things during the breakup? It's possible that you both just had to take jobs in different cities, and the breakup wasn't due to a problem in the relationship. Have these problems resolved if there were issues?

You want to come from a good place of reflection and not let bad habits make the choice for you.

Depending on the reason for the breakup, set your boundaries for how much contact beforehand. If there was abuse or toxic behaviors in the relationship, don't even go there. You can't afford to repeat this relationship again.

If you know you shouldn't be contacting this ex but feel lonely, set up a support system ahead of time. Set up activities or things to fall back on to resist the urge. Maybe you phone a different friend, join a virtual happy hour for singles, or binge watch Netflix. Anything else is acceptable, but don't phone that ex.

Write down your reasons for wanting to contact the ex. Ask yourself if this is worth the pain. Are you flea-bagging again, or is there a friendship to be had, which will provide you with genuine comfort? If it's the latter, it's okay to go there. If it's an excuse to go back together and make contact, don't.

Decide how far you are willing to take the relationship this time, without it being a rinse and repeat. If you broke up for reasons beyond your control, it's okay. If your ex was a serial cheater, phone a friend instead.

If there was abuse or toxic behaviors in the relationship, don't even go there. You can't afford to repeat this relationship again.

As life returns to a more normal state and you adjust to the new normal, we will slowly begin to notice more balance in our lives. You want to come from a good place of reflection and not let bad habits make the choice for you. Some do's and don'ts for this time would be:

  • Do: exercise ⁠— taking care of you is important during this time. It's self-care and maintaining a healthy lifestyle.
  • Do: shower, brush your teeth, and get out of your sweats.
  • Don't: be a couch potato.
  • Don't: drink or eat excessively during this time. Again, remember to maintain a healthy lifestyle.
  • Do: think positive thoughts everyday and write down the 3 things you are grateful for. Look at the impact of John Krasinksi's SGN. It's uplifting and when you feel good, you won't want to slide backwards.
  • Don't: contact a toxic ex. It's a backward move in a moment of uncertainty that could have a long term impact. Why continue flea bagging yourself?