Digital News Report – Debt consolidation loans are a great way for Americans to combine multiple debt obligations into one low payment. The goal is to lower the interest rate and the monthly installment.
There are two types of debt consolidation loans: secured and unsecured. Chase Bank encourages borrowers to use their home to refinance unsecured debt. “A lower interest rate: Rates on home equity loans and lines can be lower than credit card rates by 7-10%-or more”, the bank said in a statement.
There may also be some tax advantages to using a secured loan. Always check with your tax advisor before considering such a loan.
Borrowers can also consider a balance transfer credit card. The Capital One® Platinum Prestige Credit Card has been promoted as a great credit card for balance transfers. There is no annual fee and a 0% introductory APR until November 2011.
A bad credit score can limit the choices. “Before creditors lend money, they need to be assured that the funds will be repaid,” the Federal Reserve Bank of San Francisco said in a recent statement.
It can benefit the borrower to have an account with the lending institution.
HSBC offers personal debt consolidation loans in certain states. The bank requires borrowers to fill out an application. The lenders will want to know the employer’s name, the annual income, and current address.
By Tina Brown