Digital News Report – While interest rates remain at historic lows, many Americans are looking to consolidate their debt into one low-interest loan.
Credit card interest rates can cost consumers up to 30% APR (or more even). Many banks offer debt consolidation loans at a rate of 5%. The final rate will depend on several factors, including credit score, loan amount, and lending institution.
According to the latest figure released by the Federal Reserve, outstanding mortgage debt is declining. The Fed reports that outstanding mortgage debt decreased from $10.684 trillion in the second quarter of last year to $10.611 trillion in the third quarter (one-four unit residences). Meanwhile, consumer credit is springing back.
Wells Fargo offers unsecured debt consolidation loans. The interest rate will be higher for customers with poor or bad credit scores.
The bank says that customers typically have “more discretionary income” after consolidating their debts. “It’s important to understand that a debt consolidation loan simply transfers the debt to a new lender, so you still have debt,” the company said in a statement.
The bank offers debt consolidation loans for credit card debt, student loan debt, and other unsecured loans. They stress the simplicity of one bill.
Personal loan debt consolidation “can help you reduce interest costs and pay off debt faster”. In some instances, a debt consolidation loan may help reduce the time it takes to pay off debt. Low monthly payments required by credit card companies can string borrowers out for years on a small amount of money.
Check with a tax or other (finance) professional advisor before you consolidate personal loan debt into a home loan mortgage. There may be tax advantages, but the borrower needs to weigh the risk of losing their home because of personal debt.
By Tina Brown