There’s a new credit card debt consolidator in town — but its name is likely familiar to you.
Investment banking giant Goldman Sachs announced on Thursday that it will begin offering unsecured personal loans to people looking to pay off high-interest credit card debts. The loans will be offered through a new online platform, Marcus: By Goldman Sachs, named after Marcus Goldman, one of the firm’s founders.
Borrowers can apply for fixed-rate, no-fee personal loans of up to $30,000 for periods of two to six years, the firm said in a press release. According to Marcus’ website, applicants will be offered annual percentage rates (APRs) ranging from 5.99% to 22.99%. Late payments, partial payments, missed payments or defaults on the loan can show up on your credit report.
The platform isn’t fully open to the public just yet: Initially, applications will require a code that millions of prospective customers will receive by mail. You can request one on Marcus’ website.
“The feedback we expect to hear from the initial group of customers will help us to refine the Marcus experience,” the firm said in the release. It plans to offer the personal loans to a broader audience in coming months.
Debt Consolidation 101
Goldman — or, maybe we should say, Marcus — isn’t the only one who wants to pay off your plastic. Consolidating high-interest credit card debt with a personal loan has long served as a way for people to potentially cut down the lifetime costs of their existing debts and provide themselves with a hard date for when they can be out of the red.
But there are risks involved with this strategy: For instance, undisciplined spenders could find themselves worse off if they take out a personal loan, pay their credit card balances down and run them right up again. And when converting your revolving credit card debt to an installment loan, you’re locking yourself into a fixed monthly payment you will have to make (otherwise, your credit score could take a hit), which could be problematic if you hit financial setbacks down the line.
Plus, generally, only good credit scores qualify for a lender’s best terms and conditions, so if your credit isn’t exactly stellar — a strong possibility for folks carrying large amounts of debt — you may not be an offered an APR lower than the one you’re already paying. In any event, it’s a good idea to shop around and read the fine print of any offer you receive to be sure it’s right for you. You can learn more about the pros and cons of debt consolidation loans here.
If you decide to shop around, it can help to brush up your credit score ahead of time. (You can view two of your scores, updated every 14 days, for free on Credit.com.) If your score is currently looking shoddy, you can potentially fix it by paying down high credit card balances (we get it, that’s sometimes easier said than done), disputing errors on your credit reports and limiting new credit inquiries while your score rebounds.