Severity in Credit rollovers

Rollover credit using Credits

There is always a risk in leveraging on unearned cash with interests compounded when being rollover to next month. Many topics regarding personal finance are available yet common folks chose to turn a deaf ear on warning signals, stating that the government will bail them out to prevent an economic downturn. However, after undergoing several cycles of financial crisises, it is evident that even G-10 economies faced difficulties in performing bailouts, not to mention savaging corporate firms which have larger impacts as compared to retail consumer spendings. A few (good) experiences to learn from are the dot com crisis, asian financial crisis and 9-11 september attacks. These shocking encounters may wake some hardcore consumers up from their dreamlands.

Credit impairment over long run

The rule of tongue is simple; if an individual borrows to the maximum, there is no other ways to increase credit limits except for a temporary boost. Assuming the individual has been leading a credit spree lifestyle, in an event of emergency such as hospitalization fees, there is no way to leverage on credit cards or personal loans due to the current deficits. When the poll results were out, it is surprising that few consumers are cautious of splurging and laughed when asked on sudden expenditures sighting that let things flow naturally and wait till happen then say. The long term rollover of interests had led to credit impairments and many individuals suffered badly on huge interests racked up from credit card bills. Another shocking fact is that there are consumers who possessed major debts but continue to lead fashionable lifestyles. Upon clarifying with these debt-ridden retail borrowers, the answer is usually no one can predict the future so just splurge happily.

Inflating credit bubble with sloshing cash

It is very dangerous nowadays as credit spenders are counting on monthly paychecks to repay credit card bills. This created an artifical bubble on showing the economy doing well as most consumer spendings derived from cheap credit sloshing around. As government take adequate measures to revive the lacklustre economy, retail & commercial banks are killing the policies by offering lucrative schemes to attract high-end borrowings that might not be repaid at the end of service term. The vicious cycle will repeat until some heroes stand out to cancel credit lending programs. While leveraging up on credit for temporary setbacks is a healthy practice, too much is always bad for anything. Consumers should be wary of their current financial position and the 4 times credit limit is definitely unsustainable in many ways.

Popping the bubble Consequences

No one wants to bear the consequences of bursting the credit bubble, let alone enduring the repercussions from aftermath crisis. How many working folks went unemployed overnight? Can anyone count the number of foreclosures in a seemingly unbeatable economy - US? What are people surviving on during the hard days, scavenger huntings? In order to prevent such horrific experiences from occuring again, it is wise to organize educational talks and those who undergo financial hardships to share personal encounters & traumas. This may mitigate the pressure on influencing peers to splurge freely. The next method to adopt is to limit consumers from overstretching themselves. Regulatory bodies may need to shower other financial institutions on the loans an individual take up from one particular lender. This will lead to the banks reassessing credit competencies of the borrower instead of blindly lending with the hope of possible repayments. An economic downturn affects the entire society and not just the particular segment being badly hit.

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