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Though the Federal Reserve has nudged interest rates up, personal loans should remain an attractive option for many borrowers.
The Fed's rate-setting committee bumped short-term interest rates up by a quarter percentage point at its December meeting. That move may prompt some lenders to raise interest rates.
But personal loan rates, which have declined for much of 2016, may not rise significantly as a result, says Greg McBride, CFA, Bankrate's chief financial analyst.
"You won't see a sea change in the personal loan marketplace," McBride says. "Gradually, you may see terms change for new loans, but there's still plenty of competition that will keep a lid on those increases."
RATE SEARCH: If holiday debt has you worried, consider a personal loan today.
In Bankrate's national survey of interest rates from banks and thrifts for Dec. 13, 2016, the rate on personal loans held steady at 10.68 percent for the fourth consecutive week. The survey was taken before the Fed announced its rate decision.
The average rate is just off the low point of the year, which was 10.64 percent, and is down nearly three-quarters of a percentage point from the 2016 high. A year ago, interest on the average personal loan was 11.09 percent.
Personal loans are booming
Those low interest rates are one reason why so many consumers have rushed to open a personal loan. The credit bureau TransUnion says personal loan originations grew faster in 2016 than for any other kind of loan product.
The number of open personal loans grew 13.2 percent, from 14.9 million in 2015 to 16.18 million in September. TransUnion projects loan balances will continue to grow in 2017, as more borrowers with good credit apply for loans.
"Coming out of the recession and before the fintech boom started, it was a lot more of a non-prime and subprime product," says Jason Laky, a TransUnion senior vice president and consumer lending business leader. "Today, we're seeing subprime as less and less of a percentage of the portfolio."