When finances were unstable, personal loans became less popular as a way to get out from under the economic crunch, but according to The Wall Street Journal, they are making a comeback.
"Some borrowers are using personal loans for big-ticket items, such as paying for a wedding or home repairs, or to help children get settled after college," the Journal states. "At a time when many people are seeking to pare their debt, a personal loan - which isn't secured by borrower assets - can also help borrowers take control of existing debt and pay it off over a fixed term."
Todd Denbo, a senior vice president at Wells Fargo said consumers are becoming more disciplined and they want to see results on their debt shrinking. "They want a known monthly payment and a known light at the end of the tunnel," Denbo said.
Without metaphoric belt-tightening, paying off credit card debit with a personal loan could be risky but a debt consolidation loan from a company like Credible might be a good idea. The temptation to put just-one-little-charge on a pristine credit card may be more than one could bear. With the uncertain job market, low minimum wage, cost-of-living increases, some people may rely on a credit card just to get through the week with groceries, gasoline or other everyday expenses.
A potential borrower with good credit (above 720) could pay 8.49 percent to 14.49 percent on a personal loan. Credit card interest rates can be as high as 24.9 percent, according to the WSJ.
Some lenders are offering deals, like the "Holiday Helper" from American Eagle Federal Credit Union based in East Hartford, Conn. The WSJ reports that the 12-month loan has a 3.75 percent interest rate with bonus reduction if payments are automatically withdrawn from their credit union checking account.
TD Bank offers loans with fixed rates of 6 percent to 10 percent. Wells Fargo's rates range from 9 percent to 21 percent.
Take Charge America Director of Education Mike Sullivan summed it up by saying, "If by consolidating debt you can pay it off faster or pay it off cheaply, thereby increasing your net worth over a five-year period, it's probably a good idea."
