American debt is huge. Just about everyone has some level of debt to function, get by, get ahead or trying to reach the American Dream.
Unfortunately, while the country has probably the greatest amount of consumer debt in the world, it also has the least amount of public education on consumer finance as well. That combination has for years since the 1980s created a monster of revolving credit debt, on top of the two most common traditional borrowing forms: car loans and home loans. Add in that a good education doesn’t happen without student loans, and today it’s not surprising for the average person with a college degree to have at least $50,000 of combined debt. For those who don’t have a degree, the highest amount of debt is a worse type, credit cards.
Financial Business Isn’t Taking Prisoners
In addition to the above, financial companies today are putting pressure on the market and creating even more financial debt, especially through credit cards. Why? According to experts at Symple Lending and similar, it’s big money. No other industry creates the amount of profits seen without any additional manufacturing cost involved. The primary expense is really just labor and technology (and now, companies are looking to artificial intelligence to streamline labor costs too).
A typical household has at least two credit cards if not three, and the marketing strategy is focused on finding a way to get the same household to apply for another one. Every $5,000 of credit card debt produces, on average, at least $500 profit a year. People don’t pay down balances or they replace the debt paid with more debt. It’s no surprise then that credit cards are freely given.
Even when a credit card defaults, the loss on a few accounts is soon paid off in days with the interest gained on the thousands of accounts kept current. The system is really a proven model of success for financial credit card lenders.
How Consolidation Loans Help
The trap of credit card borrowing isn’t hidden. It’s all in plain sight with the details credit card companies provide in their paperwork and forms. That said, there is so much verbiage, using technical language and small print, that most consumers just fly by the documentation and accept the terms involved. Approval can happen in minutes and the card or number becomes active. Within a few more minutes, new debt can be created with online buying as well. It’s a proven model that works, and consumer participate.
The hard part is trying to get out of the debt. Loan consolidation can help from companies like Symple Lending by paying off the credit cards, restructuring the debt into a loan that only goes down, and then closing off the credit cards. If a consumer can commit to all this, he or she can work their way out of credit card debt effectively.