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Expand chart
Reproduced from TransUnion; Chart: Axios Visuals

New data from TransUnion suggests traditional banks might not be able to squeeze quite as much money from their credit card customers as they have in the past.

Background: For all the talk of banks being disrupted by nimbler digital competitors, it's generally impossible to see anywhere they've suffered so much as a flesh wound.

What's happening: Americans have $143 billion in unsecured personal loans — up 19% from 2018, with an astonishing 211% rise from the 2012 low of $46 billion, per TransUnion.

  • Most of those loans are debt consolidation, and most of the debt consolidation comes in the form of paying down credit card debt.
  • It's a fair assumption that the overwhelming majority of debt consolidation loans are originated online.

Why it matters: Banks have historically made it very difficult for customers to get unsecured personal loans, because they make much more money when those customers carry a balance on their credit cards instead.

  • Paying down credit card debt with a personal loan nearly always makes financial sense, but before the rise of online lenders, it was practically very difficult.
  • 68% of debt consolidators saw their credit scores rise after they took out the personal loan, per TransUnion. The rise in scores persisted for at least a year after the loans were taken out.

The other side: When it's easier to borrow money, people will borrow more money.

  • While borrowers who didn't consolidate their debt saw their total amount owed rise by $623 on average over one year, borrowers who consolidated ended up with $5,597 more overall debt than they had a year previously.
  • That's partly because a lot of people seem to consolidate their credit card debt exactly when they want to take out an auto loan.

The bottom line: Indebtedness is nothing to celebrate, but the most insidious debt trap of all is the one where your convenient payment device ends up costing you hundreds of dollars in interest every month. Anything that helps people cut down on expensive credit card debt is ultimately a good thing.

Go deeper

Coronavirus cases fall in 41 states

Expand chart
Data: The COVID Tracking Project, state health departments; Map: Andrew Witherspoon/Axios

New coronavirus infections fell by 16% over the past week — the third straight week of significant improvement.

Yes, but: The U.S. is still averaging roughly 165,000 new cases per day, meaning the virus is still spreading largely unchecked. And the rise of more contagious variants will ensure that Americans’ risk remains high.

Updated 3 hours ago - World

Biden reviews U.S. arms deals with Saudi Arabia and UAE

Trump struck several large arms deals with Mohammed bin Salman (L) and Saudi Arabia. Photo: Kevin Dietsch-Pool/Getty Images

The Biden administration has put on hold two big arms deals with Saudi Arabia and the United Arab Emirates which were approved in the final weeks of the Trump administration, a State Department official told Axios.

Why it matters: The sales of F-35 jets and attack drones to the UAE and a large supply of munitions to Saudi Arabia will be paused pending a review. That signals a major policy shift from the Trump era, and may herald sharp tensions with both Gulf countries.

Trump supporter found with pipe bombs accused of plot to attack Democrats

Five improvised explosive devices that the FBI says "were fully operational and could cause great bodily harm or injury if handled improperly." Photo: FBI/Justice Department

The FBI believes California Gov. Gavin Newsom (D) and the Bay Area headquarters of Twitter and Facebook were targets of a man facing federal explosives charges, according to a criminal complaint.

Driving the news: Prosecutors charged Ian Benjamin Rogers after finding weapons including five pipe bombs, 49 guns and thousands of rounds of ammunition following a Jan. 15 search of his Napa County home and auto repair business. His alleged goal was to ensure former President Trump remained in office.