American Express Unsecured Line Of Credit – There are two different types of personal loans – secured and unsecured. Find out which is best for you and how they affect your credit score.

This article contains general information and is not intended to provide information about American Express products and services. Similar products and services offered by different companies have different features and you should always read the product information before purchasing a financial product.

American Express Unsecured Line Of Credit

Recently, more and more people are taking out personal loans – either to consolidate debts, to pay for a big purchase or for some other important event. The increase may be partly due to the increased availability of personal loans through online lending. The US Federal Reserve puts it this way: “Today, thanks to significant marketing efforts by fintech companies, consumers view online loans as a convenient, fast and easy way to get a loan.”

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Although the current loan application processes are streamlined, there is still homework to be done before applying for a personal loan. What can you do to improve your chances of getting in? How do you get the best deal? One thing that can make a big difference is whether you choose a secured personal loan or an unsecured personal loan.

Personal loans are common loans from banks, credit unions and fintechs that you pay back in regular monthly installments. They are usually classified separately from more specific loans, such as mortgages or student loans.

According to credit reporting agency Experian, personal loans are the fastest growing category of debt in the United States. Overall, personal loan balances grew 12 percent in the second quarter of 2019 to $305 billion.2 Experian’s research also shows that people have taken out larger personal loans in recent years. Personal loans with balances of $30,000 or more grew 15 percent from 2014 to 2019, while balances between $20,000 and $25,000 grew 10 percent.

Most personal loans are unsecured. Borrowers’ choice between the two often depends on their credit score and available funds. For someone with bad credit, providing collateral can help them get a loan that they otherwise wouldn’t be able to get. But you can get a secured loan only if you have enough assets. In addition to your home or savings, including investments and certificates of deposit (CDs), these assets may include your car or future paychecks—not to be confused with payday loans.3

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Secured personal loans are less risky for lenders, so they tend to have lower interest rates and are easier to get approved for – including larger amounts and longer loan terms. Unsecured personal loans expose borrowers to less risk because their home, car or other valuables are not at stake.

Interest rates and lengths of personal loans vary considerably. One online personal loan guide posted rates ranging from about 6 percent to 36 percent for one to seven years. 4 Insured personal loans are usually at the lowest end of the interest rate scale. In August 2020, the Federal Reserve reported an average rate of 9.34 percent for 24-month secured or unsecured personal loans.

I looked at a Federal Credit Union (FCU) website and found that they usually offer personal loans from 7.99% APR for two years to 11.49% APR for six years up to $50,000. A customer owning a CD-like share certificate could take out a secured personal loan of up to 75% of the value of the certificate at less than 6% APR.6, 7

American Express Unsecured Line Of Credit

Your credit score is likely to play an important role in choosing between a secured or unsecured loan. A borrower with a low credit rating may be denied an unsecured personal loan and instead turn to a secured personal loan, which has a better chance of getting a loan. And since secured loans often have higher loan limits and longer time horizons, their lending options are more flexible.

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On the other hand, borrowers with excellent credit do not necessarily differ in terms of secured or unsecured personal loans.8

An Experian survey of people with at least one personal loan found that they borrow for a variety of reasons. Multiple answers are allowed, so they add up to more than 100%:

Many Americans have traditionally used a home equity loan (HELOC) instead of a secured personal loan for the purposes listed in this list. HELOCs usually give you lower interest rates because they use the equity in your home as collateral. However, a HELOC is very different from a personal loan in that you get access to a line of credit that you can withdraw for a certain period of time – or not. According to an April 2019 analysis by TransUnion, more borrowers with better-than-average credit scores are choosing unsecured personal loans over HELOCs, another factor driving the recent strong growth in personal loans.9

Amid the general rise in personal loans, consumers have two main options: secured personal loans and unsecured personal loans. The choice often depends on your credit score and available funds. At stake are the differences in the ease, price and terms of the loan you are looking for.

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Karen Lynch is a journalist who has covered global business, technology, finance and related public policy issues for more than 30 years.

The interest rate is the amount of money the lender charges you for the loan, and interest rates are how they calculate the amount they charge. Read more about interest rates and what determines them.

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The material available to you on this website, Credit Intel, is for informational purposes only and is intended for residents of the United States and is not intended to provide legal, tax or financial advice. Contact your own legal, tax and financial advisors if you have any questions. About American Express: American Express is an American multinational financial services company headquartered in New York. Founded in 1850, the company is one of the 30 constituents of the Dow Jones Industrial Average and is best known for its credit cards. However, Amex also offers a range of banking and credit products.

American Express offers unsecured personal loans to eligible card members. Interest rates start at 5.99% and repayment periods vary from one to three years. Customers can borrow from $3,500 to $40,000.

Amex personal loans can be used for most personal, family or household expenses, such as debt consolidation, home repairs and renovations, weddings and other large purchases.

American Express personal loans are only available to eligible card members. (If you don’t currently have an active Amex card, you can’t apply for a personal loan.) Also, you can only apply if you get an American Express application offer and still meet the eligibility requirements. Finally, you must be at least 18 years old and a US citizen or resident of the US or its territories.

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American Express is not accredited by the Better Business Bureau (BBB) and does not have a BBB rating. On Trustpilot, users rate American Express just 1.6 out of 5 stars based on nearly 3,700 reviews. However, most complaints are directed at its card services.

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If you want to take advantage of the offer, you can indicate how much you want to borrow, choose the monthly installment and some personal information. You will get a decision in a few seconds.

If you have been approved, American Express will finance the loan after you have read the terms and conditions and signed the personal loan agreement. In most cases, the funds are deposited directly into your bank account within 3-5 business days.

If you are looking for a personal loan, American Express is just one option. And if you’re not a current Amex card member, it might not be an option at all. So it’s a good idea to compare American Express personal loans with some alternatives.

Discover offers unsecured personal loans in the same amount as American Express ($2,500 to $40,000). However, you don’t have to be an existing Discover customer to get a loan. However, you need good credit with a score of at least 660. Discover also offers longer repayment terms and funds can be deposited into your account as soon as the next business day.

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