Tampa Student Loan and Bankruptcy Lawyer Blog — September 18, 2020
The Federal Reserve meets today and it is widely expected that they will begin to reduce interest rates. Last I heard, there was a 50% chance of a.50 reduction. If they want to reach a goal of 100 basis points cut by year end, they almost have to do a.50 cut today. If they want to achieve a goal of a 100 basis point cut by the end of the year, they almost have do a 0.50 cut today. I get it. The Wall Street Journal published an article yesterday that while consumer credit debt is up 11% over last year, other sources of credit are drying up and no reasonable alternatives exist.
Personal loans which are just under a 12% interest rate,
Credit card rates of interest average 22% per the Federal Reserve,
- Heloc loans average 9%
- Not only are rates a problem, but approval is as well. The Wall Street Journal cites New York Fed data that shows the origination of Helocs is “overwhelmingly skewed,” towards borrowers with high credit scores. So borrowers in trouble won’t be eligible.
- Normally, it takes awhile for deposit funded banks to offer new reduced terms to its customers. Fintech firms are able to act faster because they are dependent on the government rate for funding. Places like Affirm that service the buy-now-pay-later group may be able to approve more loans quickly.
Simply discharging the debt and then rebuilding your credit is probably the most overlooked option. Most people are unaware that their debt-to-income ratio has effectively maxed out their credit, making it unusable. Why not see what options exist to get rid of that debt now?
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