The Recession brought the days of easy credit to an end. Or did they? There are still plenty of credit cards in circulation and a huge number of people have developed balances that are costing them a high interest charge each month. If they are simply paying off the minimum each month the balance will hardly fall. If they have reached their credit limit then they no longer have credit on the card but need to pay back that minimum each month to avoid defaulting.
They have lost the real benefit of credit cards which was convenience. As long as holders paid off their balance each month everything was fine. Prior to the recession credit card companies were falling over themselves to attract new customers. There were several special offers including 0% balance transfers. There were people who juggled their finances by moving things around various cards. It was in fact possible to get a number of cards, each with a credit limit and by paying balances off in full, and even at times exceeding the amount required, their credit limit increased across the board allowing them to make significant purchases, even real estate.
The problem came with the Collateralized Debt Obligation (CDO) Crisis. The air of complacency disappeared overnight. There was widespread foreclosures, unemployment rocketed and people who had bought real estate recently because of the year on year growth in value suddenly found themselves with negative equity and few buyers anyway.
Those who had been funding their lifestyles with credit cards and even investing in real estate found that there was no escape route any longer. They often had investments that they could not cash in, and no 0% balance transfers to use as part of the solution to their financial problems.
Liabilities and Defaults
There was plenty of business insolvency and plenty of individuals who simply could not meet their liabilities. Even though the US Economy is improving many casualties remain from those days of recession. Many lost their credit cards and are unlikely to get them back in the foreseeable future. Their credit score as a result of defaulting makes it virtually impossible to get realistic loans from the traditional lenders, banks. In some cases their debts may have been written off. Where those debts still exist and people are trying to repay them there are possibilities as long as they have regular income. Today’s online lenders tend to look at an applicant’s ability to repay a loan in full over the agreed term rather than their past history. They may charge a point or two above the norm but it remains far less than the interest rate applied by credit cards.
A consolidation loan is an excellent way to put every debt into one monthly figure over a fixed term. It requires determination and self-discipline to follow a route like this but it is a path to improving a credit history in the years to come. The current level of credit card debt suggests it is a message that many have yet to hear or accept. The only reason why the overall figure of credit card debt has gone down in the USA is that much of it has been written off.
However that is not something that credit card companies will be willing to do in every case. If you see yourself in this situation and have been worried about how you can extricate yourself from financial problems perhaps it is time to do some research online to find good lenders that seem to have a sympathetic attitude to people in trouble. It is worth asking them the question: can you help me?