Credit Card Crunch is here…
The Credit Card Crunch is not only here but growing.
According to a recent article in Reuters, nearly 500 Billion dollars in available credit card lines was reduced in the 4th quarter of 2008. And that’s just the start. Estimates are another 2 Trillion will be reduced this year with a potential 2-3 Trillion in 2010.
We’ve seen a number of clients that have had unused cards canceled and available balances reduced over the last several months. This is going to affect many people very harshly, including small business owners that use credit to balance out their cash flow and keep their business alive in tough economic times like these.
There’s a lot of talk about how reduced credit card use could hurt the economy as consumers spend less since they won’t have access to easy credit. I can understand that.
Finding the positive.
My feeling is that if you help people get out from under the credit card debt as well as their other debts they will get to the point where they are able to buy what they need with cash, and spending will continue to help boost the economy and at the same time our people won’t be so burdened by debt. When you are able to eliminate your debt and get on track to contributing to the retirement you need you’ll more easily be able to spend cash on your needs which helps the economy without incurring additional debt.
Preferred debt has it’s place. It allows us to get into a home, allows businesses to rise and grow, and is useful and necessary in many ways. But personal debt has gotten out of control and is ruining lives and futures. That needs to be addressed and is one of the reasons our program has been successful for over a decade.
Why do so many people use their credit cards for purchases?
Could it have something to do with much of their cash going towards the credit card payments leaving them less cash to work with? Many are thinking they’ll catch up at some point with the credit card and be back to not needing it. But it just doesn’t happen for most people.
Our experience is that many people carry balances over for months, or even years. And while that goes on they aren’t putting away nearly enough to build the retirement they’ll need. Sound familiar?
There is going to be a lot of pain that comes with an increasingly tight credit crunch. But it could help us all get on track to get out of debt as easy credit disappears and changes need to be made to keep us all afloat. Eliminating your debt could benefit you and your family for generations.
Your credit score may not be safe.
30-35% of your credit score is based on revolving credit such as credit card debt. So think about this. If you’re overall available credit is $10,000 and you have used $3000 you are using 30% of your revolving credit. Now what happens if you have your available credit reduced and you have a total of $5,000? Well you just went to 60% of your revolving credit and you look like a higher risk now and your score can take a heavy hit. This can happen to you almost overnight as the credit card companies reduce available credit.
So as if you didn’t already have enough reason to want to rid yourself of your debt, now you may take some big hits to your credit to boot as your credit is reduced.
What do you do?
Our program has been helping people for over a decade to get completely out from under debt with a flexible plan where the work is done for you. We can show you how it can help you by providing you with a free analysis with no cost and no obligation to you.
We can prepare a free personalized analysis that shows how much you could save and when you could be completely debt free. Learn more about our program and how you can get back onto the financial path to a life without debt and with a retirement you want and deserve.
Fill in the form at the top right of the page to get your free Financial Compass analysis or visit our main page to learn more about eliminating all of your debt wisely and safely.
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