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Debt consolidation from other people may provide avenue when banks reluctant
By Sam Craine on Jul 15th, 2010
After the high-flying times before the recession, many banks are being much more careful about lending money to consumers.
As a result, some people may find it difficult to get loans for things like debt consolidation from these traditional sources. However, a recent report from CBS News noted there may be another avenue consumers could travel down: peer-to-peer lending.
With peer-to-peer lending, consumers loan money to each other to help pay off debt on credit cards or fund home improvement. While approval rates are higher, people will still need to have a decent credit history.
"Another big benefit is that the interest rates will be lower than you'd pay on a bank loans - and of course, the better your credit, the better the interest rate you'll receive," CBS News said.
Debt consolidation may be an option presented by consumer credit counseling services. When paying off credit cards in this way, people could find they end up reducing how much they end up spending on interest rates on plastic.
Along with making loans harder to get, banks have also increased interest rates on credit cards in an effort to curtail losses tied to new federal rules.
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