Save Money with Smart Lending

July 2018

By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC


Most people need a loan at some point to make a big purchase, help make ends meet, or pay for an emergency.

Only 39 percent of Americans can fully cover a $1,000 setback using their savings and Americans are taking on increasing amounts of debt through a variety of loan options.

Not all types of borrowing are worth it and it pays to be in the know.

Credit Cards

Credit cards are the most common – and most expensive – way to borrow.

The average American has a credit card balance of $6,375. Credit card companies charge much higher interest rates (17 percent on average) than other types of lenders and carrying a balance can quickly escalate. Use a credit card for purchases that can be paid off at the end of the month.

Home Equity

One of the most common ways to tap equity is refinancing a current mortgage and taking out a bigger mortgage. A home equity loan can be withdrawn as a lump sum with a fixed rate; the average interest rate is 5 to 6 percent. Under the new tax law, the money must be used to improve the home, or the interest is not tax deductible.

Personal Loans

Unsecured, personal loans do not require borrowing against something of equity. Usually, these loans have a higher interest rate (the average is 11 percent) and are locked in over shorter periods of time. These are better for smaller loans that not suitable to run up on a credit card.

Tapping 401K

Federal law allows workers to borrow up to 50 percent of their account balance with a maximum of $50,000. Borrowers then have five years to pay back the loan which comes at an interest rate typically lower than other lending options; borrowers then replace the money instead of making new contributions.

  • 12 Jul, 2018
  • Josh Smith

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