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Over the last decade there has been a fair amount of financial turmoil. It should be everyone’s aim to reach a position of financial stability. There have been times in the last ten years when that was extremely difficult. It is easier now but there are signs that many still fail to get the message. Online lenders can often help; it is a matter of getting in touch.

As the misery of the recession increased more and more people lost their jobs. With little regular income they soon defaulted on their financial liabilities. In plenty of cases that meant the mortgage and foreclosure was an inevitable consequence. Often they were meeting their daily expenses, simple food in many cases by using a credit card even though they were building up a stubborn balance that incurred penal interest at the end of the month. That was only possible until they had reached their credit limit. In the days before the recession started credit card companies would generally increase that limit to encourage more spending. Those days were gone; once their credit cards became no good for cash they faced even more severe problems and the companies pestering them for repayment.

Improving

With the recession past and the economy improving things are much better though the complacency of both borrowers and lenders in the days before the Collateralized Debt Obligation (CDO) Crisis actually caused the Wall Street problems were gone. Everyone had to be more responsible with money. Or have they gone and is the typical American financially responsible?

The Figures

Federal Reserve Statistics reveal that the average American household owes approaching £7,400 on credit cards; the figure rises to $16,000 on indebted households.  Credit cards are just one part of household debt; mortgages are the main debt though they tend to be long term, low interest and even though recently the real estate market has had it problems, growth is returning slowly. Student loan can be relatively high as well but it is the credit card that is producing the worrying debt; people often buying things they cannot afford and facing potential problems in the future. The total national credit card debt is a staggering $900 billion, over 3% up on a year ago.

One positive aspect of an increase in credit card debt is that consumer spending is increasing and that does help the economy to grow. The problem is that credit card debt sometimes goes up because households are not able to pay their regular bills from monthly income.

Analysis

Figures always need close analysis. There are some figures suggesting the total credit card debt nationwide has fallen but within that fall there is a figure that represents money that has been written off by credit card companies as non-recoverable. A few months into the recession credit card debt peaked; it then fell because of defaults but later in the recession credit card companies did relax a little.  They had to because they were not making money by reducing the number of consumers holding their cards and it is clear from the figures three or four years on that consumers have been happy to sign up to cards and spend.

Self-Discipline

The problem lies with those people who lack the self-discipline to use credit cards properly; for convenience with the balance paid off in full at the end of each month. That avoids penal interest being added. Once a credit card balance is established it is extremely difficult to manage and expensive at that. Those households with that $16,000 debt should take out a credit loan which is likely to be at an interest rate of less than half that credit card companies will apply. If they take out a term loan which asks for monthly instalments it will remove the problem of the balance. However without the self-discipline to curb spending and never build up a balance again, the exercise will be useless.

This form of loan which is often referred to as a ‘consolidation loan’ can pay off existing debts at a competitive interest rate to rectify a household’s financial problems. Loans are readily available from a new breed of online member that provides a quick and easy application process for those that can demonstrate a regular income whether they have a good credit history or not.