Debt consolidation means to use one major loan in order to pay off all the other loan. It is implemented by simply using a collateral object such as a house to turn into secured loan and pay off the other loans, or sometimes it is the other way round.
There are many organizations that specialize in debt consolidations, and amongst them Bank of America, is the organization that has introduced a program called the Clean Sweep credit line, which offers loans for debtors to use as pay offs.
Depending on the credit limit of the user the program offers a variable interest rate of around 25.44% with a 3% transaction fee every time an advance is needed. This fee may start from a minimal amount of $5 with no maximal limit. The reason this scheme is popular is that it offers payment restart terms every time a request for advance is stated and this leniency is validated for 72 months.
Bank of America and the MBNA has provided debtors with a service of borrowing a loan of up to $25,000, with an interest rate as low as 9.49%, though, this may depend upon existing credit. It could also come up to as high as 25%.
One of the main reasons this program is preferred is that there is no interest rate, no annual fee and no need for any collateral services, as with other debt consolidation scheme. With each time you lower your debt balance, you have a re-accessible cash reserve.
The repayment terms and payment amounts given are usually dependent upon the APR ( annual percentage rate), which will be calculated by the analyzing of the US Prime Rate as published by the Wall Street Journal. The MBNA is responsible for this work and they also have the right to adjust your APR according to their discretion.
