Consolidating debt td canada trust
For instance, banks and credit unions may charge you more than 20% interest in addition to a monthly fee just as you would pay for a credit card.
However, interest rates on lines of credit are fixed according to the current prime interest rate set by the Bank of Canada and vary accordingly.
In place of having to pay individual creditors, you have the option of borrowing funds from a credit union, bank, or any other financial institution and paying back all the other debt.
In this way, you’ll have consolidated or compressed the debt in a single loan and creditor.
Given that the prime rate in recent times has been very low, people have been paying interest rates of as low as 1% on their lines of credit.
However, the bank may also set your rate according to other factors such as credit scores and net worth.
Accordingly, if the current prime rate is 1.5%, you’ll pay interest rates of 3.5% where 1.5% is the Prime Rate and 2% is the bank rate.Now, you’ll only need to keep track of the payments you need to make to this lender.Getting a consultation with the bank or credit union is free of cost.Should you approach a bank or credit union, you can get a Debt Consolidation Loan at affordable interest rates.Banks may offer you Debt Consolidation Loans at 7% to 12% whereas other institutions may charge rates of 14% for a secured loan or 30% or more for an unsecured loan.