Prior to the Collateralized Debt Obligation (CDO) Crisis that triggered the financial problems that the World has suffered recently, Credit Card Companies had been keen to attract new clients by using various marketing ploys like 0% balance transfer offers. They understood that many people already had a number of cards but still sought to offer them another. It has been a recipe for disaster in many cases.
Every credit card has a credit limit imposed by the Company and as long as a user stayed within the limit it was happy; it was happier still if the user merely paid off the monthly minimum from the balance because it could then charge the high rate of interest on the outstanding balance that its terms and conditions prescribed. Those balances have proved to be a major problem to users who are well advised to use personal loans to reduce their core debt.
The financial crisis brought an increase in unemployment with the figure exceeding 10% in the USA, a country with traditionally low unemployment rates. With unemployment came the problems of meeting the monthly bills and nowhere were the problems more apparent than with credit card debt. Too many people had been drawn into using credit cards very casually, often ignoring the balances that were building up.
Credit card use to meet regular expenditure had become common place. As the credit card companies realized the problems were mounting they no longer offered unsolicited credit limit increases as people reached their limits; a line of credit was suddenly closed and the balance became a reality that needed to be paid off, particularly in those cases where the user had defaulted.
This is the worst scenario; someone in deep financial trouble. Personal loans may still be available to such people if they can demonstrate their ability to repay the loan. Even personal loans with bad credit are at a much lower interest rate than the one credit card companies charge.
A new financial reality has developed following the CDO problems and that reality made everyone look at their finances to see if there was money to be saved. One certain way was to get rid of any debt that was incurring a high rate of interest. Credit cards and store cards certainly fell into the category. Many people resolved to get rid of their range of debt by using a consolidation loan to allow them to pay a single monthly payment even if it was just a way to simplify their financial lives. Such personal loans remained at a competitive rate of interest, certainly when compared with the interest rates on credit cards that were well into the 20%s.
While the worst of the financial crisis has certainly gone, it is not forgotten. It is unlikely that the days of casual credit card spending will return even though cards are very useful. If there is a balance to pay off, personal loans are an excellent way to do it.