Digital News Report – Today more Americans are transferring credit card debt into consolidation loans. Besides credit card debt, customers are looking to consolidate student loans, car loans and other types of obligations into one low interest payment.
Total consumer credit jumped 1.7 percent from September to October, according to the Federal Reserve. Recent preliminary figures show that revolving debt, including credit cards, decreased 8.4 percent while non-revolving consumer debt, including unsecured personal debt consolidation loans, increased 6.8 percent.
Mastercard reports that Christmas sales were much higher this year. Much of those sales were likely placed on credit cards.
There are two basic types of debt consolidation loans: Secured and unsecured. Secured loans will carry a lower interest rate but are more difficult to acquire. Non-secured loans usually require a secure job or other income.
The interest rate will depend on the credit history of the borrower, loan amount and what the loan will be used for. Even people with bad or poor credit can receive an unsecured debt consolidation loan, but the interest rate will be higher.
Citibank will loan up to $7,500 for an unsecured debt consolidation. “Personal loan amounts over $5,000 may require collateral”, the bank said in a statement. The collateral could be a car.
The term will range from 12 to 60 months. The payments and interest will be fixed for the entire loan term.
The bank offers a “quick online application” with an instant decision. There are no pre-payment penalties and customers can change their mind within 14 days.
By Tina Brown