How Have Attitudes Towards Debt Changed Since the 2008 Credit Crisis?

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psychology of debt, attitude towards debt, credit card debt, 2008 credit crisis

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The following is a guest post. Enjoy! 

Since the global credit crisis in 2008, personal budgets and disposable incomes have been strained. Recent government austerity measures have been adopted by various nations attempting to balance returns to economic growth and their debt.

Attitudes of the Past

 

Given these measures, have consumers been able to successfully manage their domestic budgets? The perception of personal debt pre-credit crisis is well publicized, with households adopting relaxed approaches to credit cards, personal overdrafts, etc. Recent studies have been performed with alarming outcomes showing that the average US citizen owes circa $8000 of unsecured debt, with around a third of that amount being in relation to credit cards.
 
This attitude to debt is also leading to developments in lenders strategies as many consumers took debt pre credit crunch and have simply been managing this in the previous year’s, however have not been able to repay core debt. leading to many banks having to take further losses as back in the 2008 – 2009 financial periods.

Present Attitude Towards Debt

 
From 2009, lenders have seen consumers micro manage their debt as opposed to repaying it as consumers perform their own research in the types and cost of their debt. For example, in the past, consumers were likely to focus on one method of debt to manage their monthly budgets (i.e. paying for day to day spending with credit cards). In actuality (assuming a monthly salary is paid), it would be cheaper to use an agreed overdraft limit with a lender (hence avoiding high monthly charges) to pay down the core debt on the credit card, which most likely is being charged at anything from 18-27% APR and manage their daily spend with an overdraft. This is very similar to the way a business manages its own cash flows (i.e. short term solutions for short term problems).
 
Many businesses have awoken to the above movements in consumer behavior and noted the problems with households trying to reduce their core debt in agreement with its providers. Additionally, many debt solutions bodies can be found in the market to help consumers manage their budgets resulting in agreements with providers resulting in affordable solutions.                

How about you all? How do you think attitudes towards debt have changed in the years since the 2008 credit crisis?

Share your experiences by commenting below!

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