More than ever, people are taking on large amounts of debt compared to how much they save. In the past few years, the average household savings in North America dropped below zero. So when you take the country as a whole, people made less money than they spent. This is possible because of consumer credit. The flexibility of credit can lead to serious trouble if you aren\’t careful.

With the economic downturn of the past few years putting many people out of work, some who had floated credit card debt and multiple mortgages were unable to make their payments. It is more common than it has ever been for people to carry large amounts of consumer debt, and it has been shown that people tend to spend more when they use credit cards compared to other methods. When you use credit, it doesn\’t feel like you\’re handing over money, and you get used to buying things without a solid plan to pay it off. Without correction, habitual overspending leads to credit debt so severe that they need to seek professional assistance from a bankruptcy trustee or a credit counselor in order to get control of their finances.

Where did this pitfall of our consumer culture come from? The history of buying on time goes back to 18th century England. Over the following two centuries, individual stores hoped to shopping more convenient for their customers by offering credit on a wide variety of items, including gasoline, furniture, telegrams or clothing. Henry Ford developed the innovation of automobile financing for his Model T, since buying one outright would wipe out a family\’s life savings.

During the second World War, credit was forbidden, but afterwards, the economy prospered. A new era began with the rise of suburban culture, and credit made it possible to outfit their homes with the newest appliances. Then, one day in 1949, a diner at a New York restaurant left his wallet at home, and this inspired him to start a business that provided a means for people to pay for things without cash. Two years later, he and his associates had created the first modern consumer credit card. The Diners Club card could be used in participating New York restaurants, and before long, twenty thousand people had signed up for one.

The first credit cards, including Diners Club, American Express, and Charge-It, offered a set amount of time for debtors to pay for their purchases fully, typically sixty days. The next major innovation was the introduction of revolving credit, with the BankAmericard from the Bank of America, first offered in 1958. The cardholder was given the flexibility to carry a balance and make payments over longer periods. First issued by the Bank of America to its account holders, the B of A devised the licensing of its BankAmericard program to independent banks in the mid-sixties, and its popularity swelled.

The biggest competition for the popular BankAmericard was MasterCharge, a similar system developed by a group of banks in 1967. Within a decade, most of the independent banks had aligned their own credit programs with the two major card companies. We now know these two companies by their current names: the BankAmericard became Visa in 1977, and MasterCharge was renamed MasterCard in 1979.

Nowadays, those who fall into the trap of relying on credit cards to float their lifestyle will sport at least one Visa or MasterCard in their wallets. When these balances become too much for the consumer too handle, they often turn to a bankruptcy trustee, debt consolidation or credit counseling service to help get their debtload reduced. The credit card companies then have to take a hit on the purchases that the delinquent consumer could not pay for, so they protect themselves by thoroughly assessing a consumer\’s risk factor before issuing them a card. The debtor who goes the bankruptcy route will be forbidden credit for seven years. Our modern system of revolving credit is frought with danger for those who don\’t manage their money well.

Rely on the bankruptcy trustee Scarborough dedicated to helping individuals relieve the burden of debt. Kevin Thatcher and Associates help find the solution that meets your needs.

Rely on the bankruptcy trustee Scarborough dedicated to helping individuals relieve the burden of debt. Kevin Thatcher and Associates help find the solution that meets your needs.
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Author Bio: Rely on the bankruptcy trustee Scarborough dedicated to helping individuals relieve the burden of debt. Kevin Thatcher and Associates help find the solution that meets your needs.

Category: Finances
Keywords: bankruptcy,debt,credit,counselling,money,finance,family,personal,management,life,home,shopping