Avoid vicious Credit recurring Cycles

Cheap Credit on the go

When the US federal chief announces that interest rate hike is postponing, there is a loud cheer from the retail borrowers as well as the professional banking institutions. Hedge fund managers and day traders leverage more on credit to generate better returns with lower borrowing costs incurred. Bulge bracket banks offer personal loans to retail borrowers with attractive interest-servicing schemes. The money supply flows around the economy boosting productivity as more incentives are being given at work. Established firms borrowed larger amount of cash to expand abroad and complete Research & Development (R&D) at satisfactory levels. Almost everyone benefitted from the generous postpones by the Fed's committee. However, there is a group of retail segment that likely detriments from low inflationary environment - Retail Borrowers who leverage on credits.

What is Credit Rolling method?

Based on loaning statistics, retail borrowers who faced troubles repaying the principles, often indulge in unwanted expenditures such as costly holiday trips and speculative activities. These lendees, typically with sizeable wages, tend to loan from another bank to remunerate the current outstanding one. The vicious cycle continues banks after banks, churning interest rates to extremely high levels and finally, pre-destined to defaulting on bank loans. This is widely known as the credit rolling method whereby retail borrowers will leverage on new credits to repay existing facilities. Not only is this ineffective, but also puts the lendee at higher risks of defaults. Never touch this strategy at all!

How to Prevent such cases?

Under normal circumstances, the first thing to do is to cancel all credit functions make available to for individuals. This will prevent itchy hands from drawing unwanted overdrafts on impulse. Another method is to request the respective banks to install messaging functions to warn on further purchases. And also, put a limit to the credit limits in order to mitigate future expenses. All these expenditures added up to crazy costs that hinder one's path to retirement. In general, it is practically impossible to avoid certain big ticket items like mortgage loans and transportation costs.

Alternatives to vicious Credit Cycle

The most vital matter is to source for alternatives or remedy to cut off the vicious credit cycle that clings on the debtors. There are credit bureaus to help clear provisional debts by negotiating with creditors that possessed authoritative powers but it is the last place any borrower will want to go as te credit ratings will be affected in a negative manner. Perhaps, seek help from relatives and friends as they are not likely to be cash-oriented due to the family tree logic. The lendee may request for financial assistance from direct superior like salary advancements or increase wages temporary. Most of the time, your colleagues are likely to chip in. Put an end to this credit lines today.