Our Changing Globe

Archive for the ‘unsecured loans’ Category

Put together, the seven biggest U.S. credit card issuers earned over $27 billion in operating profit in 2007.

Although banks can borrow at interest rates that are nearly as low as Treasury yields, they’ve been cutting credit lines and raising their fees, and the average annual percentage rate offered to new card customers in the U.S. is now 14.2 percent.

Just a few years ago, a booming economy kept loan losses in check and banks perfected marketing tricks and introduced the concept of teaser rates, and in just eight years Americans received around 44 billion pieces of mail jammed into their mail-boxes that promoted credit cards.

Now however, issuers are developing new models to calculate the fees and interest rates that they say are needed to cover the growing number of bad debts.

New rules are being put into place too, and if somebody who’s had a card for a long period suddenly uses it at a grocery store for the first time, then it’s quite likely that he’ll be flagged as a potential credit risk and be added to a watch list.

It’s perhaps understandable that banks need healthy credit card earnings to ensure their survival because they can no longer rely on the securities markets that caused the economy to collapse, but it now appears likely that many of them will lose their long-term customers after the economy stabilizes.

Credit cards have become a mainstay of U.S. banking in recent years because the offer a steady income without the volatility that goes with trading and investment banking, but loans on credit cards are unsecured, and the industry absorbed about $55 billion in credit card defaults last year, which is up from $43 billion in 2007.

Fed rules, which will curb sudden changes in interest rates are set to go into effect on July 1, 2010 – but many Democrats in Congress are now pushing to have the legislation advanced, and they also want greater built-in consumer protection.

Right now it’s difficult for even people with good credit ratings to get loans and whereas having real estate used to mean almost instant loan approval even that is now problematical because of collapsing house prices.

So what about people that have continually been in arrears, have defaulted on debts, have liens on them or have even filed for bankruptcy?

Well if they have a job they can still get loans although the lender might insist on having a part of the borrowers salary attached, meaning that the monthly payment will be automatically deducted from his or her salary. And the interest rate will be high but not normally one that will prevent someone who really needs money in a hurry from signing up.

Well if you’re unemployed and don’t have any collateral you might feel after reading the above that you have no chance of getting any kind of loan but that’s not true. It might be more difficult and it will be more expensive but it won’t be impossible by any stretch of the imagination.

Unemployment is soaring and will get worse and many people have lost their homes but the banks still need to lend money or they’ll go out of business which means that they’re now making riskier and riskier loans.

The bottom line is that people that are in urgent need of money can make use of what are known as high risk immediate personal loans which provide almost immediate money when it’s needed most and many people use them to consolidate other mounting debts.

There are many different loans available and many different banks making them and many of the banks are small and you won’t have even heard of them but there are available lists which are getting continually updated.

If you have collateral but believe that there’s a good chance that you’ll default on the loan then take out an unsecured loan even though it costs more.