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‘It’s just gonna get paid when it gets paid’: Balance-carrying cardholders crunched by Fed rate hikes on August 2, 2023 at 10:00 am Business News | The Hill
Americans with credit card debt are caught in the crossfire of the Federal Reserve’s battle to bring down inflation.
The average annual percentage rate (APR) for credit cards hit 22.39 percent during the second quarter of 2023, up 3.5 percentage points from the same period last year, according to a new study by WalletHub.
5 takeaways as the Fed reignites its inflation fight
“The current average credit card APR is the highest it’s ever been in the past two decades due to the recent Fed rate hikes,” WalletHub analyst Jill Gonzalez told The Hill.
Gonzalez anticipates credit card APR will increase further as a result of the Fed’s decision to raise interest rates again last week.
The Fed has hiked interest rates 11 times since March 2022, raising its baseline interest rate last week to a 22-year high. Fed rate hikes are meant to slow the economy and reduce inflation by making it more expensive to borrow and owe money.
While rates on some loans — such as mortgages — are only influenced by Fed hikes, credit card companies usually move rates in lockstep with the Fed.
Those higher rates are now deepening the debts many Americans are facing.
Caitlin Hogan, a 32-year-old case manager in central Kansas, told The Hill she had to put some unexpected expenses on one of her credit cards and is focused on paying off another one.
“I do not want to slip down the very slippery slope!” Hogan wrote.
Hogan’s plan is to put a little extra money towards that balance, but said “it’s just gonna get paid when it gets paid.”
Credit card debt on the rise
The national credit card balance is around $1 trillion, more cardholders are carrying a balance than ever before, and the average household carries $10,000 in credit card debt.
Riley Bookout, a graduate student at Texas A&M University, told The Hill he’s more cautious about what he puts on his credit card.
‘Don’t see the point of it’: Consumers feel the pinch as Fed raises rates again
“If I were to miss a payment — and I don’t make a ton of money — it could hurt,” Bookout said.
“I think it’s concerning that we’re having to raise the interest rate at all anymore,” he added. “From the outside, it feels like the economy’s doing rather well.”
Middle and low-income families were hardest hit by high inflation that made it difficult to afford basic needs including food, gas and housing, Gonzalez said. While inflation is far lower now than it was last year, the nation’s total credit card debt lays bare “the almost devastating effects of these increases.”
‘A long way to go‘ before rates come down
Inflation has plummeted from its peak at 9 percent year-over-year in June 2022 to 3 percent in June 2023, but Fed Chair Jerome Powell warned last week inflation has a “long way to go” before it falls to the Fed’s 2 percent inflation target.
Powell said the Fed may decide to raise interest rates again in September if inflation does not appear to be in check, and will likely keep rates high until it is quashed for good.
Powell: Housing market has ‘a ways to go’ before prices cool
“Inflation has proved repeatedly has proved stronger than we and other forecasters have expected and at some point that may change. We have to be ready to follow the data,” he said.
Gonzalez expects more hikes before the end of the year as the Fed works to cool the economy, and she anticipates credit card debt and the unemployment rate will continue to climb over the next few months.
“There’s still uncertainty about whether we’ll face a recession in the second half of the year or not, but it’s important for consumers to start saving up regardless,” Gonzalez said.
How to manage credit card debt
While it can be difficult to save when the interest keeps piling up, Candace Lee, vice president and client advisor at Glassman Wealth Services, said there are several options for tackling higher credit card debt.
“Anytime there’s excess cash that you have in your bank account, just focus on paying down the one that has the highest interest rate,” Lee said. “You’re basically just placing money in interest rate fees every time you kind of just leave that one to build.”
Cardholders may also focus on paying off the credit card with the highest balance, or a smaller balance that’s easy to pay off “so you kind of feel like you’re making progress.”
Lee does not usually recommend her clients to refinance their credit card debt. She said there may be fine print that’s missed that could make it even harder to pay down their debt.
If possible, it’s important to make the minimum payments on credit card — and to make them on time — to avoid hits to your credit score and late fees.
Lee says in the immediate term, she tries to be as encouraging as she can when working with clients who are struggling with credit card debt.
“Some people can’t help having credit card debt just based on their income,” she said.
Lee added that getting into the habit of evaluating your accounts, expenses and income as you have extra cash to pay off credit card debt “is just a smart strategy.”
Tackling late fees
The Consumer Financial Protection Bureau (CFPB) proposed a new rule in February to cap credit card late fees it estimates cost Americans around $12 billion each year.
If the proposed rule is finalized, late fees would drop from as much as $41 per violation to $8, among other provisions.
The CFPB estimates this rule would reduce late fees by as much as $9 billion annually, but banks and credit unions are lining up against the proposal.
In a May letter to the CFPB, the American Bankers Association, the Consumer Bankers Association and the National Association of Federally-Insured Credit Unions warned credit cards could get more expensive and difficult to get if the rule were implemented.
The associations also argued late fees are an “important incentive” to encourage on-time payments, minimize the risk of default and support good credit.
Business Americans with credit card debt are caught in the crossfire of the Federal Reserve’s battle to bring down inflation. The average annual percentage rate (APR) for credit cards hit 22.39 percent during the second quarter of 2023, up 3.5 percentage points from the same period last year, according to a new study by WalletHub. 5…
Business
The Cities Bracing for Trump’s Immigration Crackdown
In the wake of Donald Trump’s recent election victory and his promise of “the largest deportation operation in American history,” several major U.S. cities are bracing for potentially seismic shifts in their economic and social landscapes. As the nation grapples with the implications of this proposed policy, urban centers that have long been havens for immigrant communities find themselves at the epicenter of a looming storm.
Los Angeles, often dubbed the “City of Angels,” stands to lose more than its celestial nickname suggests. As a primary gateway for immigrants, the city’s vibrant tapestry of cultures and its economic engine could face significant disruption. From the bustling streets of Koreatown to the sun-drenched orchards of the Central Valley, the absence of undocumented workers could leave gaping holes in the city’s workforce and cultural identity.
Across the country, New York City, with its iconic skyline and melting pot reputation, faces its own reckoning. The Big Apple’s 5.9 million immigrants, many of whom are undocumented, form the backbone of industries ranging from construction to healthcare. The potential exodus could transform neighborhoods like Jackson Heights and Flushing, altering the very essence of what makes New York a global city.In the Sunshine State, Miami’s tropical allure belies the turbulent times ahead. Home to 2.5 million immigrants, the city’s economy relies heavily on sectors like tourism and hospitality – industries where undocumented workers often fill crucial roles. The potential deportation of these workers could send shockwaves through Miami’s economic ecosystem, from South Beach’s glitzy hotels to the agricultural heartlands of South Florida.
Chicago, the “City of Big Shoulders,” may find those shoulders significantly weakened. With 1.7 million immigrants in its metropolitan area, the Windy City’s diverse neighborhoods and industries face an uncertain future. From the meatpacking plants to the tech startups, Chicago’s economic resilience could be tested like never before.
In the Lone Star State, Houston and Dallas stand as twin testaments to the complexities of immigration policy. These Texas titans, each home to large immigrant populations, could see their booming economies stumble. The construction sites that dot their ever-expanding skylines and the service industries that keep these cities humming could face unprecedented labor shortages.
Out West, the San Francisco Bay Area’s reputation as a bastion of innovation and progress could be challenged. The region’s tech industry, often reliant on immigrant talent, might find itself grappling with a new reality. From Silicon Valley’s coding campuses to the agricultural expanses of the Central Valley, California’s economic powerhouse could face a reckoning. Phoenix, rising from the Sonoran Desert, could see its growth trajectory altered. As Arizona’s urban center, it stands at the forefront of the immigration debate, potentially facing not just economic impacts but social and political upheaval as well.
These cities, along with others like San Diego and Las Vegas, are not just facing potential economic disruptions. They are staring down the barrel of profound social change. Family separations, community fragmentation, and the erosion of cultural enclaves built over generations are all possible consequences of mass deportations. Moreover, the fiscal implications are staggering. Undocumented immigrants contribute billions in taxes annually, often without receiving the full benefits of their contributions. Their sudden absence could leave gaping holes in city budgets, potentially affecting public services and infrastructure projects.
As these urban centers brace for impact, the debate rages on. Supporters of stricter immigration policies argue for the need to enforce laws and protect American jobs. Critics warn of economic devastation and the unraveling of America’s urban fabric. What’s clear is that America’s cities stand at a crossroads. The coming months and years will likely reshape urban landscapes in ways both visible and invisible. From the foods we eat to the services we rely on, from the neighborhoods we call home to the very character of our cities, the impacts of this proposed immigration crackdown could be far-reaching and long-lasting. As the nation watches and waits, these cities – vibrant, diverse, and economically vital – find themselves on the front lines of a policy that could redefine what it means to be an American city in the 21st century.
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How Trump’s Deportation Plans Could Reshape Major Cities
In the wake of Donald Trump’s recent election victory, his ambitious plans for mass deportations have thrust America’s urban centers into the spotlight. As the nation grapples with the potential implications of what Trump calls “the largest deportation operation in American history,” cities across the country are bracing for significant changes that could reshape their economic, social, and cultural landscapes.
The stakes are particularly high for metropolitan areas like New York, Los Angeles, Houston, Dallas, and Miami, which host the largest populations of unauthorized immigrants. These cities, along with other major urban hubs such as Chicago, Washington D.C., and San Francisco, stand at the forefront of a looming transformation that could reverberate throughout the nation.
Economic Tremors
Economists warn that the proposed deportations could send shockwaves through urban economies. Mark Zandi, chief economist at Moody’s, cautions that businesses would face “significant challenges” if a substantial number of immigrants were removed. Industries such as construction, hospitality, and healthcare—pillars of urban economies—could face severe labor shortages.
Joe Brusuelas, chief economist at RSM, emphasizes the potential ripple effects: “The native-born workforce cannot meet current labor demands.” This labor gap could lead to increased wages, potentially rekindling inflation—a concern that looms large over city planners and policymakers alike.
Community Fabric Under Strain
Beyond economic considerations, the social fabric of cities hangs in the balance. Elena, a Nicaraguan immigrant in Houston, voices a fear echoed in immigrant communities across the nation: “I’m scared… This is my home.” The threat of family separations, particularly in mixed-status households, casts a long shadow over urban neighborhoods.
Immigrant advocacy groups like FIEL are mobilizing, advising clients to prepare for “anything that can happen.” This atmosphere of uncertainty could lead to decreased community engagement and cooperation with local authorities, potentially impacting public safety and community cohesion.
Cities at a Crossroads
As the debate intensifies, cities find themselves at a crossroads. Some, like New York and Los Angeles, have historically positioned themselves as “sanctuary cities,” often at odds with federal immigration enforcement. The impending clash between federal policy and local governance promises to be a defining feature of this new political landscape.
Meanwhile, the logistical challenges of implementing such a massive deportation operation remain daunting. Questions abound regarding detention facilities, transportation networks, and the sheer manpower required to carry out Trump’s vision.
Looking Ahead
As America’s urban centers brace for potential change, the full impact of Trump’s deportation plans remains to be seen. Legal challenges are all but certain, and the resilience of America’s cities will be put to the test.
What is clear is that the coming months and years will be pivotal for urban America. As Jason Miller, a senior Trump adviser, puts it, the plan is to “immediately reinstate” immigration policies from Trump’s first term. For America’s cities, this could mean a period of unprecedented change, challenge, and, potentially, transformation.
As the nation watches and waits, the story of America’s cities in the face of this ambitious deportation plan is just beginning to unfold. The outcome will undoubtedly shape the future of urban life in America for years to come.
Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring screenwriters. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!
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Donald Trump Wins 2024 USA Election
Based on the election results, Donald Trump has indeed won the 2024 U.S. presidential election, defeating Vice President Kamala Harris. Here’s an analysis of the key statistics and implications:
Electoral College Victory
Donald Trump has secured the presidency by winning crucial battleground states and flipping some key states that were previously held by Democrats. The final Electoral College tally is still being determined, but Trump has surpassed the 270 electoral votes needed to win.
Battleground State Performance
Trump’s victory was largely secured by winning several critical swing states:
- Wisconsin: Trump’s win here was pivotal in securing his path to victory.
- Pennsylvania: This state flipped back to Republican control.
- Georgia: Another key state that Trump managed to win back.
- Michigan: Trump successfully flipped this traditionally Democratic stronghold.
Popular Vote and Voter Priorities
While the final popular vote tally is still being calculated, exit polls provide insight into voter priorities:
- Economy and democracy were top concerns for voters.
- Abortion and immigration also played significant roles in voter decision-making.
Congressional Control
The election results extend beyond the presidency:
- Republicans are set to take back the Senate majority, securing at least 51 seats.
- Control of the House of Representatives remains undetermined.
Media Implications
The outcome of this election could be seen as a challenge to mainstream media narratives for several reasons:
- Polling Discrepancies: Many pre-election polls suggested a tight race or even a slight Harris advantage in key states. Trump’s victory, particularly in battleground states, may indicate that polls underestimated his support.
- Narrative Shifts: Throughout the campaign, much of the mainstream media focused on Trump’s legal challenges and controversies. His victory suggests that these issues may not have resonated with voters as much as economic and policy concerns.
- Voter Priorities: The emphasis on issues like the economy and immigration in voter decision-making may indicate a disconnect between media focus and voter concerns.
- Electoral Predictions: Many mainstream outlets were cautious about predicting a Trump victory, even as results began to favor him. This hesitancy could be seen as a reflection of broader media skepticism about Trump’s chances.
- Underestimation of Trump’s Base: The results suggest that Trump’s core support remained strong and potentially grew, despite negative coverage in much of the mainstream media.
It’s important to note that while the election outcome may challenge some media narratives, it doesn’t necessarily invalidate all mainstream reporting. The complex factors influencing voter behavior and the challenges of accurate political forecasting remain subjects of ongoing analysis and debate.
As the dust settles on this historic election, both the media and political analysts will likely engage in extensive reflection on the factors that led to Trump’s victory and the implications for future political coverage and analysis.
Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring screenwriters. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!
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