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Personal loans vs. credit cards: Which is better as interest rates drop?

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Deciding between personal loans and credit cards as rates fall depends on your financial situation.

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Americans are carrying more debt than ever. In the second quarter of 2024, nationwide credit card debt hit a record $1.14 trillion, while personal loan debt reached $245 billion. These high numbers reflect the steep borrowing costs of recent years.

But inflation is cooling down, and many experts are now adjusting to what could be a series of Federal Reserve interest rate cuts. This shift could make borrowing more affordable.

So, which option is better as rates fall: personal loans or credit cards?

The answer isn’t straightforward — it depends on your situation.

Henry Yoshida, certified financial planner and co-founder of Rocket Dollar, explains, “Credit cards are essential in a digital e-commerce environment. But [you may choose a] personal loan for [several] reasons such as credit card debt consolidation or to make a major purchase.”

As rates drop, each option has its pros and cons. Let’s find out what financial experts recommend in this evolving economic climate.

Considering a personal loan now? See how low of an interest rate you could secure here.

Personal loans vs. credit cards: Which is better as rates drop?

Personal loans often work best for large, fixed expenses or debt consolidation. Lauryn Grayes, founder of Wealth Gems Financial, illustrates this by noting that borrowers could potentially save thousands of dollars in interest by using a personal loan to pay off credit card debt versus the card itself, due to the latter’s much higher interest rate.

Bryan Meizinger, executive vice president and chief credit officer at FAIRWINDS Credit Union echoes this benefit, noting that personal loans are useful “if you have multiple debts that you want to consolidate into one manageable payment.” He adds that the fixed repayment schedule can motivate quicker debt repayment than credit cards.

Credit cards, however, shine in their flexibility. Grayes points out, “During COVID-19, [some] relied on [credit] cards to fund essentials when income declined temporarily.” This adaptability makes credit cards valuable in uncertain financial times.

Meizinger notes that while “0% APR promotions can be enticing,” they require discipline to avoid accumulating debt after the promotional period ends. In contrast, personal loans’ fixed terms can help borrowers stay on track with repayment.

Your choice should align with your financial needs and habits. Personal loans may be for you if you need structure and lower rates on large expenses. Credit cards may work well if you’re after flexibility and short-term promotional benefits.

Not sure which is best for you? Start comparing your personal loan options online now.

Pros and cons to know

Here’s a quick recap of each option’s pros and cons:

Personal loan pros:

  • Lower interest rates (roughly 40% to 65% less than variable credit card interest rates in any interest rate environment)
  • Fixed payments and repayment period
  • Promising for debt consolidation

Personal loan cons:

  • Requires payback commitment to maintain your credit
  • May require good credit for the best rates
  • Potential fees (e.g. origination, early repayment)

Credit card pros:

  • May be easier to qualify for (compared to personal loans)
  • Potential rewards (e.g. cash back, travel points)
  • Convenient for short-term or emergency expenses

Credit card cons:

  • Higher interest rates (often 20% or more)
  • Possible growing debt if you only pay down the minimum each month
  • Risk of reckless spending

Expert strategies for managing debt and credit

Financial experts suggest the following strategies for managing debt as interest rates drop:

  • Focus on total debt: “Focus less on the top-line interest rate and take pride in tracking your outstanding principal balance as you pay down debt,” Yoshida advises. As you see that number get lower and lower, you’ll gain confidence in eliminating debt.
  • Use the debt snowball method: “Start with your smallest unsecured loan balance first,” Meizinger suggests. “Once that’s paid off, move on to the next smallest loan balance.” This approach gives you motivating short-term wins and keeps the momentum going.
  • Consider balance transfers: “Take advantage of a signup bonus and introductory low, or 0%, interest rate offer by signing up for a new credit card and transferring the existing balance,” suggests Yoshida. This could save you thousands in interest if you carry a high credit card balance at a high interest rate.
  • Understand credit utilization effects: Consolidating credit card debt with a personal loan may reduce your credit utilization ratio (and boost your credit score). But avoid accumulating new credit card debt after consolidation. That could undo these benefits.
  • Gradual paydown before consolidation: Reduce card balances through increased payments before consolidating into a loan.

The bottom line

Your choice between personal loans and credit cards as interest rates drop depends on your financial situation. “Lower rates present an opportunity to accelerate debt payoffs, but variable-rate cards pose risks if rates increase later,” Grayes says. To make an informed decision, consider your debt amount, financial stability and risk tolerance.

Speak with a few financial advisors or lenders to explore your options. They can help you understand how these tools work in different economic climates and guide you toward a strategy that best fits your needs.

Also, look into reputable debt relief companies. These organizations can offer helpful services such as debt consolidation, negotiation with creditors or structured repayment plans.



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U.S. Marines, Japanese and Australian troops will train together amid heightened concerns over China

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U.S. Marines will take part in joint training with Japanese and Australian forces in northern Australia, the three countries’ defense ministers announced Sunday as they expressed concern about a spate of confrontations with China’s increasingly assertive military.

Australia’s acting Prime Minister Richard Marles hosted U.S. Defense Secretary Lloyd Austin and Japanese Defense Minister Nakatani Gen for talks in Darwin, Australia.

The trilateral amphibious training between Australia, Japan and the U.S. Marine rotational force in northern Australia will begin in 2025 with Exercise Talisman Sabre. Australia will also join Exercise Orient Shield in Japan for the first time next year.

“Recognizing the critical role the trilateral partnership plays to uphold regional stability, we commit to trilateral policy coordination and to consult each other on regional security issues and contingencies,” they said in a joint statement.

In their statement, the three defense ministers reiterated “serious concern” about destabilizing actions in the East and South China seas including “dangerous conduct” by the Chinese military against Philippine and other vessels from the region. China claims the South China Sea almost in its entirety.

“We reiterate our strong opposition to any unilateral attempts to change the status quo by force or coercion,” they said, adding that it is “important that all states are free to exercise rights and freedoms consistent with international law.”

The ministers also urged the importance of peace and stability across the Taiwan Strait. China claims self-ruled Taiwan as its own territory and has stepped up military harassment with frequent drills around the island.

Marles, who is also Australia’s defense minister, said following talks with his Japanese counterpart in September that both nations looked to ways to build greater familiarity between their forces. One of the “obvious opportunities” was for Japan to participate in activities during the U.S. Marine rotation in Australia, he said Sunday.

“Having a more forward-leaning opportunity for greater training with Japan and the U.S. together is a really fantastic opportunity,” he said.

Asked if the increased military cooperation would anger Beijing, Marles said the decision was about building “the best relationships possible with like-minded countries, with our friends and with our allies.”



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Photographing the rooms of kids killed in school shootings

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An unmade bed

A library book 12 years overdue

The next day’s outfit

Notes to her future self

Click on the door to enter



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How do you make a portrait of a child who isn’t there? Photographer Lou Bopp found a way, but it wasn’t easy.

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In early 2018, I was deplaning after an 18-hour flight when Steve Hartman called. He had an idea: to photograph the still-intact bedrooms of kids who had been killed in school shootings. 

It’s a headful. And six years later, I still don’t have an “elevator pitch” for the project — but then, I don’t often talk about this project. It is by far the most difficult I have ever worked on.

When Steve, my friend of about 25 years, asked me if I would like to be involved, I said yes without hesitation — even though I didn’t think we would get any families to agree. There is no way that I would have said no to partnering with him on this.

Emotionally, I was not sure how I would get through it. Within a few months I was on my way to Parkland, Florida. Alone. I’m not sure that I realized that I would be on my own. 

But here I was. An on-location commercial photographer who focuses on people and pets to create compelling, honest, textural and connective moments for large brands, per my LinkedIn professional profile, on a project where there is no one to take photos of — for the most brutal of reasons. 

How do you make a portrait of a child who is not there?

In each of these children’s rooms — the most sacred of places for these families — there was the sense that the child had just been there, and was coming right back. It was as if they’d just left their room like that when they went to school in the morning and were returning in the afternoon. 

I wanted to capture that essence.

Most kids’ bedrooms are their very own special places, and these were no different. I looked everywhere, without touching anything. I photographed inside trash cans, under beds, behind desks. Their personalities shone through in the smallest of details — hair ties on a doorknob, a toothpaste tube left uncapped, a ripped ticket for a school event — allowing me to uncover glimpses as to who they were. 

But there was an emotional challenge in addition to that creative one. Over the course of more than six years, we visited with many families around the country. The parents I spoke with seemed grateful that I was there. But each time I received a call or text from Steve about a new family, my heart sank. 

It meant another family had lost a child.

I find it unfathomable that children being killed at school is even an issue. It makes no sense. It’s impossible to process. The night prior to each one of the family visits, I didn’t sleep. And I knew I wouldn’t going into the project. It’s not a self-fulfilling prophecy. It is nerves. And empathy. And sorrow. And fear. 

In my notes from early on in the project, back in 2018, writing in seat 6H on the flight back from Nairobi, I reflected on the emotional task ahead.

“This is going to be one of the most difficult things ever, emotionally, for me, and not just work related. As I read my research documents, I get visibly emotional,” I wrote, noting my gratitude that the dark cabin prevented the other passengers from seeing me.

The prospect brought my own fears to the fore, both for myself — “I can’t help thinking about Rose,” my daughter, “and what if. I’ve lost sleep over envisioning the what-ifs well before Parkland” — and about and for meeting the families in the project: “When I read about April & Phillip and Lori’s plight, I somehow, for some reason put myself in their emotional position even though that is impossible, I have no idea, it’s beyond comprehension, I do not know what they feel. I do not know what I am going to say to them, I’m scared beyond belief. And alone.”

But just days later, I was photographing the first assignment for the project: Alyssa Alhadeff’s room. She was just 14 years old when she walked out of that room to head to Marjory Stoneman Douglas High School. I was shaky meeting the family friend who greeted me at the house. Her daughter was Alyssa’s best friend, and a photo of the two girls was on the table.

According to my notes, “The room was a beautiful teenager’s messy room. My emotions were kept in check the way that they usually are; By hiding behind the camera. I removed my shoes before entering. My heart was pounding and it reverberated through my body and soul, I felt like I was in one of the most sacred and special places on Earth. I was so careful not to touch anything.”

I left feeling ready to explode in sadness and anger.

Later that day, I photographed Carmen Schentrup’s room. Her younger sister had survived the Parkland shooting, but 16-year-old Carmen was killed in her AP Psychology class. Meeting her parents, April and Phillip, was what I was most scared of. 

“I feel so much pain and compassion for them and I don’t want to say the wrong thing, drop cliches etc.,” I wrote at the time. “I spoke to Steve for guidance. He said, just be you. That’s all I can do. Just be me. He was right, those three words helped carry me through this entire project. Just be me.”

April let me in, and I worked quickly, only meeting Phillip as I was leaving. “The conversation felt like we all three were just trying to hold it together. I cannot imagine what they are going through, my heart hurts for them. This was / is such a painful project, and reconciling it will be impossible.

“I think about how anything can happen at any time to any of us. Literally. You never know,” I wrote.

After only about 16 hours on the ground in Florida, I was done with the first portion. I felt the project was a must, but I also dreaded the next call from Steve about the next family. I didn’t know when that call would come — many years later, or the very next day, possibly never. 

But last month, we — and the documentary crew that filmed us working — completed this project. While I haven’t seen it yet, I know Steve’s piece won’t be a typical Steve Hartman segment. How could it be? I know he struggled too, and we both have spent a lot of time processing this. 

I remember one August evening, I was devastated as I left the home of one of the families. Within minutes, I passed an ice cream shop crowded with other families — seemingly carefree, full of joy and laughter. The juxtaposition, mere minutes apart, cracked my soul.

I hope some way, somehow, this project can facilitate change — the only possible positive outcome for this I could comprehend. After the news cycle ends, these families will still be living with an incomprehensible nightmare.



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