Cash? What's that?Like it or not, we now operate in a world of consumer credit. Most of us live in a mortgaged home, drive a financed car and shop using a credit card or store finance. Gone are the days of, heaven forbid, actually saving up for a purchase. The consumer credit society is well and truly entrenched. But where does that leave us? In a lot of debt, most likely!As personal lending, in the form of personal loans and hire purchase, gained in popularity from the 1920s and 30s, it was overtaken in recent times by the juggernaut that is credit cards. And why stop at one when you can have any number of credit cards in your wallet? What many are discovering is that it's way too easy to spend on the card, however when you start using one card to pay off another, it really is time to get off the borrowing-to-spend roundabout. The graph below shows the national debt level in personal loans and credit cards in Australia from March 2008 to March 2009.  It's not surprising that credit card market share has outstripped personal loan marketshare by 2.8% over the period from March 2008 to March 2009. The graph above clearly shows the seasonal behaviour of credit users – credit card debt is paid down from the beginning of the year only to skyrocket at mid-year sales time. It gradually increases again and peaks at Christmas after which a concerted effort is made to pay off the debt. And we're back to square one. The trend for personal loan demand cuts a consistent line through the peaks and troughs of credit card usage and the graph illustrates the slow and steady approach still favoured by people working towards shedding debt. Even though the credit card market has grown by 6.83% in the 12 months to March '09, personal loans have also grown by a respectable 4.03%, just 2.8% behind credit cards. Personal Loans ... Car Loans ... |
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