How the Fed’s Interest-Rate Hike Affects Consumers and Businesses

If borrowing costs continue to rise, now is a good time to adjust your strategy

By Consumer Reports (edited by Steve Hasseler)

March 21^st 2018

The Federal Reserve increased short-term interest rates in March to the highest level in a decade. The move, which is good news for savers, will put added pressure on consumers’ and businesses borrowing costs.

If the central bank continues to push up rates (it says it is likely to raise rates three more times this year), then consumers and businesses should be adjusting their borrowing strategies now to minimize the impact later on. 

As expected, the Fed raised its benchmark federal funds rate on March 21st by a quarter point, to an upper limit of 1.75 percent—still well below the historic average. But every increase in the rate—which is what banks and credit unions charge each other for loans—gets passed on to consumers in the form of higher rates on everything from credit card balances to car loans.

With that in mind, here’s how to prepare for the continued rise in consumer and business borrowing rates.  

More on Interest Rates

Mortgages. If you’re in the market for a new mortgage, or you have an adjustable-rate mortgage, rising interest rates could mean you’ll be paying more on your loan.

Although the Fed’s interest-rate hike doesn’t directly affect mortgage rates, it influences other factors—such as the 10-year Treasury bond—that do affect mortgages. 

So what can you do? If you have an adjustable-rate mortgage, you may want to consider refinancing to a fixed-rate loan before long-term rates increase further, says Adrien Auclert, an assistant economics professor at Stanford University. And if you’re thinking of taking out a new fixed-rate mortgage, consider doing it sooner rather than later, when rates may be even higher.

Do you have a home equity line of credit on your house?  That rate has risen and will increase further if rates rise again.  If you have a Home equity loan, that is probably a fixed rate and your rate hasn’t changed.

Do you have a line of credit for your business?  Carrying a balance? That rate just went up.  Think about getting a term loan to fix your rate.  If you borrow money on a seasonal basis, (borrow in the spring and pay back in the fall or vice versa) expect that cost to increase a little as well.  

Credit cards. Most credit cards come with variable rates. As interest rates rise, the annual percentage rate (APR) you pay on any credit card balance is also likely to increase.

Any time the Fed raises its benchmark rate, banks quickly follow by hiking their prime rate, which is used to determine many consumer and business rates, including those for credit cards. So check to see whether your bank is raising its prime rate and charging more for credit card balances. 

One way to avoid paying higher rates is to pay down your credit card debt. Another option is to transfer an outstanding balance to an interest-free balance transfer card, offered by many card issuers. Just be sure that you can pay off the balance before the promotional rate, which can be as long as 18 months, expires.

Student loans. If you take out a new fixed-rate federal student loan or you have a loan that charges variable rates, the amount you pay is likely to inch up. Higher rates may kick in soon—the government resets the rate it charges on new fixed and variable federal loans every July. 

If you have a private student loan with a variable rate, your rate is also likely to rise.

As rates increase, you can avoid paying more by refinancing your loan and locking in a fixed rate. Not everyone can do this, though. A recent report from LendEDU.  a marketplace for student loans, found that 43 percent of applicants were denied refinancing. Those with an average FICO credit score of 757 had a better chance of being approved.  

Car loans. The cost of borrowing to buy a car will also rise. The rate increase today was small, but if future increases are on their way, car loans stand to become much more expensive. 

There is an upside. If fewer people are buying cars, inventory levels could climb, which, in turn, could lead to the price of new cars falling.

Savings accounts. Although banks can be quick to raise rates on credit card borrowers, they may take the opposite approach when it comes to how much they pay in interest-bearing savings accounts. According to Bankrate, the average rate on a money market account is currently 0.15 percent—compared with 0.11 percent offered one year ago. 

You could earn more by depositing your money in an online bank, where rates tend to be higher. You could also transfer a portion of your savings to a certificate of deposit, but you won’t have access to your funds for a period of time.  Local CD rates have risen over 2% (15 months seems to be a popular term now) while money market and savings accounts are below .5% 

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Selling to YOUR Customer
Paul Morales – Tradition
Transition Tool – use over and over through the sales process -Remember your job is to lead – you are in
control of the sale
Keep in mind- your customer is doing something they don’t do every day
Overview – what are you doing
Benefit – benefit to them
Permission – Ask permission to take the next step ( would you like to try, see, feel, hear)
Selling your child • to take a bath
• Selling yourself to buy shoes or an outfit…
• Selling your employee to buy into your vison
• Selling your partner to an idea of a change in lifestyle (healthy eating)
Great Examples of Sales being everywhere
Sale Cycle – It doesn’t matter what you are selling there is always a line to the sale. It almost sounds
unreal that there is a sale in every field –But you are always trying to get your “customer” to do what
you recommend.
a. If you are striving for growth – take strategies from other businesses, make them yours
i. Voice
ii. Communication
iii. Tone
Categories
Use your knowledge of the product or service and communicate to them how they
will benefit from “buying” it.
FBI
Feature – give them a visualization of how this product or service will add value to
their life -evoking emotion
Benefit – What specific points of your service or product will impact their life – evoking
emotion
Impact – What is their life going to be like after they purchase your product or service –
evoking emotion
ADD VALUE
Build repour – Match and Mirror (M&M) their language or pacing and leading-similar to M&
M – once you are in sync with them you can influence them.
Greeting – be friendly, smile, enthusiastic, sharp and knowledgeable (even if you don’t know
everything about what you are selling
1.Needs Analysis – Sales is more about listening than selling, focus more on the opening (listen to
their wants and needs, can you alleviate some kind of pain or frustration in their life. Turn maybe’s
2.Road to the Sale
Open ended questions -ex – what’s most a. important to you?
b. Closed ended question – ex – DO you like – stops the conversation
their wants and needs, can you alleviate some kind of pain or frustration in their life. Turn maybe’s
into a YES. If they come to you looking for something you don’t offer you are wasting your time.
Tell stories – Stories will go a long way. It’ll “Light Up” your customer by evoking the emotion
creating visuals in their head.
a.Brand Value Story – Talk about what your company does in the community – tie it to the individual
or their life.
3.Product selection – When you are offering the “product selection” bring their wants and needs
into the offerings (remember they already gave you this information in step 2)
4.Expect the objection and Overcome it -You will likely always have an objection
Trial Close – Is this something you want to do today? Assume the sale – Which one works best for
you? What color do you want? What date so you want to book your event?
5.Isolate the objection- the customer will tell you what they need, try to find a value add for them
a. Do you like the product
b. Do you like me
c. Do you like our business
Ask for the sale – When it comes to this piece – There is more information Make sure you’ve
earned the right to ask for the sale
6.
• If you’ve gotten 3 yes’s you’ve earned the right to ask for the sale
• If you get any no’s – start over with what they are looking for
Always strive to close the sale. If you cannot close the deal, always close the deal with “When can I
follow up with you?” – Can you create emotion with the this piece. If they own it EMOTIONALLY,
they are going to own it FINANCIALLY.
Follow up
Create Urgency – Sale, Offer, Schedule – Structure it right so you are not bullying but create an
urgency to take action
• Create Fear
Thank you card
Ask for referrals
Ask for Reviews
Constant Contact after the sale via cards, emails, newsletters, events
Key thought from Dario – Owner of Tradition- The talent of your employees is crucial when it
comes to sales. Inspect what you expect.

FINANCIAL FOCUS: Stay Calm on the Investment “Roller Coaster”

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor, Adam Casper

Unless you live near an amusement park that does a lot of advertising, you probably didn’t know that Aug. 16 is National Roller Coaster Day. Actual roller coasters provide people with thrills. But as an investor, how can you stay calm on the “roller coaster” of the financial markets?

Here are some suggestions:

• Know what’s in front of you. If you’ve ever ridden a roller coaster in the dark, you may find it scarier than if you boarded it in daylight – after all, it can be unsettling not to know where you’re going. The same can be said about investing: If you have no idea what’s in front of you, you might find the journey unnerving – and if that happens, you could make panicky decisions, which are usually bad ones. So prepare for the inevitable market volatility – it’s a normal part of the investment landscape.
• Buckle up. When you’re on a roller coaster, you need to buckle your seat belt or use a restraint. You want to have the excitement of the ride, but you certainly don’t want to take unnecessary risks. And you can enjoy some of the excitement of investing without incurring more risk than you are comfortable with, too. One way to lower your risk level is to diversify across a range of investments – stocks, bonds, government securities, and so on. That way, if a market downturn primarily affects just one type of investment, you’ll have some protection. However, although diversification can reduce the impact of volatility on your portfolio, it can’t protect against all losses or guarantee a profit.
• Choose a strategy for the journey. Different people have different ways of handling a roller coaster ride. Some like to throw their hands up, enjoying the feeling of abandon, while others hold on tightly to the bar in front of them. When you invest, you also need a strategy that works for you, and the best one may be the simplest: Buy quality investments and hold them for the long term. How long is “long term”? It could be 10, 20, 30 years or more. Famed investor Warren Buffet says his favorite holding period is “forever.” If you’ve chosen a mix of quality investments appropriate for your risk tolerance, you may be able to hold them until either your goals change or the investments themselves undergo some transformation.
• Stay for the whole “ride.” When you hop on a roller coaster, you’ve got no choice – you’re staying until the ride is over. As an investor, though, you can exit the investment world whenever you like. But if you take a “time out” from investing every time the market drops, you risk still being out of the market when it rallies – and the early stages of a rally are often when the biggest gains occur. Furthermore, if you keep investing during a “down” market, you’ll be buying shares when their price has dropped, which means your dollars can go further – and you’ll be following one of the basic rules of investing: “Buy low.”

You can’t take out all the twists and turns of the investment road, but by following the above suggestions, you can help make the ride less stressful – and possibly more rewarding.

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Grow Your Business in 2018
By John Tickner,  President, WACK/WUUF Radio
Here are a few ideas on how to get the most out of your companies Advertising/Marketing budget in 2018. There are only three ways to grow a business – whether it’s radio stations or  retail/service businesses:

Although advertising is still the fastest way to bring in new customers, there are many other ways to increase your customer base with smart marketing.  Some of these marketing ideas cost little or no money, yet allow smaller businesses to compete with their much larger competitors.  Creating an event around helping a local non-profit organization is a great way to create goodwill in the community, while providing free publicity for your company.  Our radio stations are currently sponsoring a “Winter Coat Drive” in conjunction with Catholic Charities of Wayne County, with Walmart as a coat drop off location.  Through social media, window posters, press releases and public service radio announcements we hope to be able donate a couple hundred winter coats to needy families in Wayne County.
 
Radio and television stations offer free publicity for events that are fundraisers for non-profit organizations.  Our stations do this through public service announcements, interviews on our public affairs programs (“Live Line”) and on our on-air community calendars.  We also have four online platforms that provide free news articles including our new local online newspaper, YourNews.com.  To submit an article or press release to YourNews.com, just go to the website and click on the submit tab on the top of the page.  After a simple registration and setting up a login, you will be able to submit articles at any time.
 
There are also ways to increase your business with help from the Newark Chamber.  I recently discussed with a Chamber member whose business is moving to a new location, to consider hosting a Business After Hours event at the new location and working with the Chamber on the Grand Re-opening.  Our Chamber does not charge to distribute an invitation for a Grand Opening or non-profit event to our membership. 
 
Another idea to bring in new customers, would be to offer discounts to other Chamber members to become new customers.  For example, our radio stations could give 15% off the cost of a radio schedule for a new advertiser that is a Chamber member.  Doing more business with each other might be a simple way of bringing in new customers.  Contact our Chamber office or a Board Member if you have a discount you would like to offer other Chamber members.   I have also found that networking events like our Business After Hours are a great way to meet potential new customers.  Although I attend the Business After Hours mostly to unwind after a long day, I can think of several of our current customers that I met at these events.
 
I hope these ideas help you in planning your Advertising/Marketing for the new year.