«Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts,
generally unsecured ones.
Some lenders will return the security deposit to cardholders after having made timely payments over a long period, such as 12 months, and convert the card to
an unsecured one.
Some lenders may turn the card into
an unsecured one after a consistent period of good payment history.
Then there's the question of who's going to buy them, because
the unsecure ones will probably be cheaper.
They often have significantly fewer fees, meaning you end up paying less for a secured card than you would for
an unsecured one.
Almost any type of a loan falls into 2 main characteristics — a secured or
unsecured one.
Some lenders will return the security deposit to cardholders after having made timely payments over a long period, such as 12 months, and convert the card to
an unsecured one.
Some lenders may allow you to upgrade your secured account to
an unsecured one.
However the interest rates on a secured loan can usually be cheaper than you'd expect to get for
an unsecured one.
If you necessitate a large amount of money to pay for a service or good, it is likely that you will be able use your credit card if it is
an unsecured one.
Secured cards have low limits and high APRs in the 20s, but many don't charge annual fees like
the unsecured ones.
Some lenders may turn the card into
an unsecured one after a consistent period of good payment history.
Everybody knows that secured loans imply lower interest rates than
unsecured ones.
In a Chapter 13 case we have an opportunity to turn a secured debt into
an unsecured one through lien stripping.
If you've made all of your payments on time and demonstrated creditworthiness, your account will be transitioned to
an unsecured one, and your initial deposit will be returned.
Later, after seeing your responsible use of credit, some lenders may upgrade your card to
an unsecured one (return your deposit) or increase your credit limit without asking for additional deposit.
Some issuers will let you transfer your secured line of credit to
an unsecured one, which is better for your credit score because it doesn't require you to open a new account.
And even if you do not qualify for an unsecured credit card, you can always apply for a secured one just for the sake of building a good credit history so you can obtain
an unsecured one within a few months.
If within first 12 month of account opening you manage your credit line in a proper way without late payments, your card may be upgraded to
the unsecured one.
However, there can be some reasons why you can't get
an unsecured one.
There are 2 types of personal loans: secured and
unsecured ones.
The secured debt can convert to
an unsecured one after the sale.
Debt consolidation is loan taken to pay off a number of debts into a single payment generally
the unsecured ones.
And make sure you pay your secured loan off, if you have another one, before moving on to
the unsecured ones.
You might be able to consolidate some secured loans (like your car payments), too, but since secured loans generally have lower interest rates than
unsecured ones, this might not be the best move.
If you compare the interest rate on a typical credit card to what you can get on a bank loan — even
an unsecured one — it's obvious that keeping long - term debt on a credit card is just like burning money.
This loan would be
an unsecured one with fixed payments over a pre-determined time period.
As secured credit cards, usually, come with higher interest rates than
unsecured ones, be careful while using them.
Also secured credit cards usually have higher interest rates than
unsecured ones.
With that said, my question is more around the implications of converting a secured loan into
an unsecured one - shifting the risk.