The Bank Loan And Traditional Lending In The USA

An old bank building in North Dakota, USA
Information About Credit And Loans In The USA
Part 1 The Introduction Of Personal Savings And Loans In The USA
Part 2 The Bank Loan And Traditional Lending In The USA
Part 3 Mortgages And Modern Types Of Loan
Part 4 Applying For A Loan In The USA

In the twentieth century and before the advent of the Internet there were few choices for anyone who wanted to borrow money. Whether you wanted a mortgage to buy your own home, a personal loan for a car or a credit card to help regulate your monthly spending, most people relied on their local bank. In this article we take a look at:

  • Traditional lenders in the US
  • Banks and borrowing
  • Types of credit in the USA
  • Credit cards and American consumers

But, even after the steady increase in online banking services, many people continue to prefer a trusted name like the Bank of America or Wells Fargo. These are two of the oldest and most traditional banks in the US.

Changing to digital banking

However, like their new rivals, both of these big banks and other well known names like Citi and Capital One, have had to embrace an online presence so that they do not fall behind in the era of digital credit products.

The days of taking time off work to pay a visit to the bank are fast declining and some traditional lenders are being squeezed out of the credit market by online giants such as Prosper Marketplace Inc and the Lending Club Corp. Both of these newer lenders have been the subject of scrutiny because it was reported that they had failed to make adequate checks on the background of borrowers.

The average amount borrowed with a personal loan is $7,000

So, even though digital and online banking is convenient it is always a good idea to do some diligent research before taking out a loan or other credit product. Make sure that your chosen company is ethical, reputable, fully registered, regulated, trustworthy and professional.

Types of credit in the US

You can get any kind of credit in the US if you have a good enough credit history and credit score. Whether you choose to go online or pick a traditional lender there is a wide choice.

US personal loans

You can apply for a personal loan in order to pay for a large purchase like a car or a wedding. There are both unsecured and secured personal loans available and sums available range from $1,000 up to $100,000. However the average amount borrowed in the US is around $7,000.

A pile of colorful credit cards

Rates for personal loans depend upon several factors including the amount borrowed, the length of the agreement and your credit score and history. Personal loans are paid back by a monthly payment and the agreement will specify all the details including the payment schedule, the total cost of the loan, the APR and any fees for early repayment. You can work out how much you can afford, and indeed, how much you are able to borrow, by using one of the many online personal loan calculators.

Credit cards in the US

Credit cards are a popular way of borrowing and a card can be useful for emergency situations and for people who travel a lot. There is a wide choice of cards with some offering benefits such as cash back, low interest rates and travel rewards.

Rates for personal loans depend upon factors including the amount borrowed, the length of the agreement and your credit score.

The main benefit of using a credit card is the convenience and the main drawback is that if you do not pay off the balance on the due date, you will be charged high rates of interest for the privilege of borrowing.

Each month you will get a statement advising you how much is due and the due date. This is the minimum amount that must be paid or you will be in default of the terms. Paying off only the minimum amount due means that the debt can last for years so it is always better to pay off the balance in full.

If you pay off the balance then you are getting interest free credit for up to 56 days. However, the temptation of buying non essential items using a card has led many people to get into serious debt. As is always the case, credit can be an excellent financial tool if used correctly but it can also lead to money problems.

Information About Credit And Loans In The USA
Part 1 The Introduction Of Personal Savings And Loans In The USA
Part 2 The Bank Loan And Traditional Lending In The USA
Part 3 Mortgages And Modern Types Of Loan
Part 4 Applying For A Loan In The USA

About the author

David Warren

David Warren is an expert on personal loans across the United States. His career in banking has helped make David the loans specialist that he is today. He shares his analysis and insight into the personal finance industry on onlinecreditusa.com