Debt consolidation loan for credit card debt

Millions of Americans have already been hit with increased credit card interest rates, but if your rates haven’t gone up yet, keep your eyes open; there’s probably a rate increase notice in the mail right now. It’s time to look into a debt consolidation loan.

Robert Manning, of the Washington Post, described credit cards as “yuppie food stamps;” a way of making ends meet. Right now, there are more than 700 million general purpose credit cards in use, and another 500 million retail store credit cards. Moreover, the average American household carries more than $10,000 in credit card debt. If a household happens to have credit cards at 18%, and makes minimum payments, it will take roughly 48 years to pay off the debts. Makes a debt consolidation loan sound sensible, right?

The average credit card rate is almost 14% this week, compared to six months ago when it was only 12%. However, for anyone who makes a late credit card payment, the rate can go as high as 30% or more. And, when interest rates get that high, a debt consolidation loan is just about the only way to get out from under credit card debt.

In the most recent Federal Reserve survey,
•    54% of senior bank loan officers said they had or would soon increase interest rates on credit cards held by consumers with good credit;
•    74% said they had, or will, increase rates for consumers with bad credit;
•    50% have or will but credit card limits; and,
•    40% said they have or will increase fees.

In a flash of creativity, they’ve even introduced a new fee—an inactivity fee for cardholders who pay off their accounts every month, or don’t use the card at all.

With a debt consolidation loan consumers have:
•    Lower interest rates—as low as 6.99% with good credit
•    Fixed interest rates
•    Consistent monthly payments
•    Faster payoff with savings of $1,000s in interest charges.

If you’re thinking about a debt consolidation loan, consider working with America One Unsecured, a loan consulting firm. They can help you learn more about your debt management options, and help you get the best rate a debt consolidation loan.

Personal line of credit or personal loan?

Everyone needs credit sooner or later, but different situations require different loan products, each with a unique set of advantages and disadvantages. Aside from auto loans or mortgages, most personal loans are classified as a personal line of credit or a personal loan. So which is which, and when is each most advantageous?

• A personal line of credit is ideal for ongoing projects such as home renovations or wedding planning, because the borrower makes payments only on the amount of the credit used. For instance, a June bride may purchase her gown in October, buy stationery in February, and pay deposits to the caterer and reception venue in March, and so on. If the bride takes out a personal loan instead of a personal line of credit, she’d be making payments on the full amount regardless of what portion of the loan she’s used.

• A personal line of credit makes an idea safety net. When an emergency strikes, a personal line of credit is at the ready to meet financial needs. Unlike personal loans that require application and approval processes with each need, a personal line of credit can be tapped into as needed without further application.

• A personal line of credit is generally available for any amount from $10,000 to $250,000—depending, of course, on the applicant’s credit history and income.

• A personal line of credit usually has a variable rate of interest that is lower than that of personal loans.

• Some personal loans carry a penalty for per-payment. There is never a prepayment penalty with a personal line of credit, because there is no timeline for paying off the credit. Any unused or paid off portion of the personal line of credit is immediately available to be used again, and until it is, the borrower can enjoy lower monthly payments.

Let a loan-consulting firm help you determine which loan products are best for your needs, and help you acquire them. America One Unsecured has been helping people achieve their dreams and attain financial security since 1999, and they can help you too. Click here to learn more and get started.

Nearly every time someone talks about starting a small business, the suggestion of applying for Small Business Administration (SBA) loans comes up. SBA loans are wonderful things – since its inception in 1953 more than 20 million small businesses have received SBA loans – but there are some serious misconceptions and drawbacks to SBA loans.

For starters, the very term “ SBA loan” leads many to wrongly infer that the SBA is a lender. Rather, SBA loans are small business loans from commercial, private or nonprofit lenders that are backed by SBA loan guarantee programs.

Through SBA loans, small business owners who are denied loans are given a helping hand from the SBA through loan guarantees that back up to 90% of the loan total. The advantage for the lender is in sharing the risk of default with the government, so they’re far more likely to approve SBA loans that those without a guarantee.

Another serious drawback to SBA loans is the long and frustrating approval process – for most borrowers the procedure will take six to nine months, and even then the application may be denied. The reasons for this are simple. Borrowers have to go through a lengthy application process with the bank, and then go through an even more rigorous procedure with a federal agency.

But the nature of the loan guarantee is often another source of confusion about SBA loans. Many borrowers think that if they default on SBA loans, the SBA guarantee means they’re off the hook with the bank. Nothing could be further than the truth.

When small business owners default on SBA loans, the SBA may eventually pay a portion of the loan value to the lender, but only after the lender has made aggressive efforts to collect from the borrowers. If the SBA allowed lenders to sell them out to every defaulting borrower they’d soon be out of business, so instead they hold lenders’ feet to the fire. If that means the banks foreclose and seize borrowers’ business and personal collateral, so be it.

And finally, SBA loans can be expensive. The federal government charges a minimum of a 2.5% guarantee fee to the banks, and the banks pass that expense on to the borrowers.

None of this is meant to imply that small business owners shouldn’t attempt to receive SBA loans. It’s just a recommendation that prospective borrowers consider all their options.