Why People Go Into Debt ?

The reasons for the indebtedness of people vary widely, but point out the most important causes. Acquisition of goods and services: which are generally not obtainable with current income of individuals. This is called "leverage." Acquisition of financial assets: in Venezuela is very fashionable to buy debt bonds, so some banking institutions finance the purchase of such individuals and companies involved. Inability of being unable to bear the usual costs with revenues it receives: this is what we will call later negative net cash flow. In these cases, usually resort to using credit cards or personal loans. Emergencies: Accidents, illnesses, unexpected repairs on the house or vehicles can significantly alter the budget of many families driven into debt. Lack of control: some people, and without a false sense of purchasing power that gives credit cards, incur unnecessary debt. This is reflected regularly in high balances on credit cards.

Existence in the country of negative real interest rates: this means that banks offer interest rates for instruments of deposits, lower inflation, so people know intuitively you choose to purchase goods and services (first through money Cash and second through debt) in order to withstand the impacts of inflation. A reduction in lending rates of interest: Complementing the previous section, low interest rates on loans motivate and encourage people and businesses to borrow. Obtaining bank references: Some people apply for credit cards to have bank references for future contingencies, such as purchasing a home. It is well known that hardly a given bank loans for a significant amount of money if the person or company has no bank references, especially credit cards. Enforceability of tenure in Travel: In many hotels, car rental agencies, clinics, and others, it requires a credit card customer, so do not possess may bring inconvenience to the person when traveling or having an emergency. Extraordinary circumstances: For example, holidays, weddings, birthdays, dismissal or resignation of employment, etc. Felix Gonzalez MS Web Site: Email: