Household debt to income ratio is the highest in Australian history. It is based on the recently concluded statistics by the RBA (Reserve Bank of Australia) as of March this year. It stated that the household debt is already at 189.7 times the average household disposable income which is the highest level recorded.
This highest level recorded can be associated with the increased household costs, stable wage growth and higher mortgages which is an integral part of the major Australian cities’ high-priced housing market.
On the other hand, the above statement disregards the complications of the debt problem in Australia. It overlooks the technological changes to payment methods and spending habits which may be the reason for the rapid growth in consumer debt.
Some Australians still chose to shift from debit or credit cards to the cash-budgeting system. This is because it is a simpler method of budgeting, by simply withdrawing a specific amount of cash and carefully allocate this cash to a specified period, in this way, the amount you spent is easier to remember. Most people may have preferred cashless payments but still, a large number of withdrawals have proven that cash is still actively in use.
Though using cash can be sometimes inconvenient because most people feel an emotional attachment in handing over money, this can also be the answer to help people for their uncontrollable sending and get away from debt.
The RBA and the ABS (Australian Bureau of Statistics) have released their recent statistics on personal finance and household debt which shows a drop in overall credit debt. The recent statistics also shows that the value of fixed personal loans for debt consolidation has increased significantly.
They have stated that between the months of April and May there is a significant increase in fixed loans for debt consolidation, this is after its rise during the months of January and February. On the other hand, credit card has decreased between the months of April and May and a more significant decrease between the months of January and February.
Debt Consolidation Personal loans usually feature lower interest rates as compared to credit cards. Having said that, they also feature higher interest rates when compared to secured personal loans, where an asset is being used as a security on the amount borrowed.
Having a debt whatever amount it may be, it can affect your mental health as well as your credit standing. Your credit standing alone can play a big role in the approval of your future application for a home loan.
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