Analysis: Households get richer than debt

What is the property situation of Czech households? Are we getting rich or are we borrowing more and more money? Where and where are our assets stored? These and other questions are answered by a study “The Financial Behavior of Households in the Czech Republic in Theory and Practice” prepared for the Czech Banking Association by experts from the University of Economics.

“The increase in the amount of funds that households have held in current and savings accounts over the past decade is also related to a decline in interest rates on time deposits to record low levels,” explains Associate Professor Penry Ronly from the Faculty of Finance and Accounting, University of Economics.

However, the favorable development of the total volume of deposits with banks obscures the differences between households. It can be assumed that one group of households saves and creates deposits in banks, while the other group of families borrows money in banks. “From the structural point of view, the indicator that some are saving and others borrowing may be stable, but in reality a certain group of households may be over-indebted,” says co-author of the study, Professor Rick Cendel from the Faculty of Finance and Accounting, University of Economics. 

 

Overall, the debt burden of households is increasing

debt loan

At the same time, the analysis shows that the debt burden of households – ie the status of consumer and housing loans in relation to wages and salaries – is increasing. “Growth in this ratio indicates that indebtedness has helped stimulate economic growth, but the room for its further growth is gradually depleting,” says associate professor Penry Ronly.

The argument that household indebtedness is much higher in many developed countries than in the Czech Republic is not acceptable, according to experts. “In an international comparison, indebtedness of Czech households is smaller or even significantly smaller than that of some advanced economies, but the economic maturity of the country is only one of the criteria for assessing the adequacy of this indebtedness,” notes Penry Ronly.

According to the authors of the study, other factors also play a role, such as the tradition of rental or property housing, economic policy and the associated level of indebtedness of other sectors, the country rating and the resulting high interest rate on consumer credit.

 

Overall, we are getting richer, not afraid to invest anymore

debt loan

A look at the overall wealth situation of Czech households shows that we are getting richer as a whole. While in 2008 Czech households owned property worth USD 9.1 trillion, in 2017 it reached USD 12.5 trillion. The total equity of Czech households thus increased by 37.5 percent over the next ten years.

With the advent of the crisis ten years ago, some households began shifting their funds to safer assets such as real estate, land and valuables. “In the last decade, households have learned to look for ways to better capitalize on their funds through profitable investments. They are no longer afraid to save their savings in financial assets, ”explains Mira Pamecnik, economic analyst at the Czech Banking Association.

In the financial assets of households, the fastest growth of holdings of long-term securities rose from USD 17 billion to USD 152 billion, which is almost nine times. “This growth is evidence of the rapidly growing interest of households in institutional bonds of domestic and multinational companies,” concludes Mira Pamecnik.

The 5 biggest debt traps for young people

The annual report from the directory inquiry firm Creditreform has shown a clear trend in terms of debts among young people for years. The number of debtors under the age of 20 has more than quadrupled since 2004, according to the debtor atlas. Today, every eighth person in the age group between 18 and 20 is no longer able to cover running costs or at least not to spend more than the income. It doesn’t look much better for the age group between 20 and 30 years. Since 2004, the number of debtors in this group has grown by around 60 percent. But what are the main causes of this frightening development?

The main reason for the trend is the attitude of young people who no longer think about how much they can really afford when buying. More and more young adults are taking advantage of offers with apparently low installment loans, which often have to be serviced over a period of 24 months. In addition, many banks make targeted use of young people’s mood to consume by offering overdrafts to trainees and creating the illusion that you can afford anything without money.

For many young people, the joy of consumption is soon followed by the fear of the creditors. Quite a few young adults are in debt to a whole range of donors and have long been unable to service the monthly installments. The five largest debt traps are presented below to give an overview of the dangers for young people and to offer a way out.

The cell phone

The cell phone

The cell phone or the cell phone contract is the debt trap that most young people fall into. Anyone who does not have a mobile phone with an Internet flat rate these days is not one of them and cannot be online around the clock on social networks. The need for constant availability means that many young people take over when buying a smartphone and also choose a tariff that is far too expensive. In addition, the cell phone is a status symbol in the circles of many young people, which influences the position in the group.

The tricky thing about cell phone contracts is that not only are the contract fees debited monthly, but mostly the smartphone is also paid in monthly installments. As a result, many young people only pay 40 to 60 USD per month to pay the installments. In addition, there are also usage-dependent costs in many cases.

If you are interested in a new cell phone or a new contract, you should consider some important points before buying so that the bad awakening does not come in the end:

  • The monthly installments due should be added up to a total amount. This is the only way to decide whether you can really afford a new smartphone.
  • If in doubt, you should rather choose a cheaper smartphone and not be tempted by group constraints or your friends’ models.
  • There are numerous comparison portals for mobile phone contracts on the Internet where you can find the cheapest tariff.

The car

The car

The car is not only one of the biggest debt traps for young people. Similar to the cell phone, it is viewed as a status symbol in many circles. Above all, many young people cannot estimate the running costs of a car. These include:

  • Gasoline costs
  • repair costs
  • Insurance

If you add these three items, you easily get three-digit monthly amounts that teenagers pay for the maintenance of a car alone. With the salary of a trainee, this financial burden is usually not manageable. As with the mobile phone, the possibility of paying in installments when buying a car is another problem. Cars can even be ordered as a leasing car, so that no down payment is due at all.

dress

dress

The clothing debt trap is particularly important for young women and in many cases leads to overindebtedness at a young age. The advertising, which is completely focused on consumption, fools us into believing that you have to wear trendy, seasonal fashion in all seasons to look good.

Many young people nowadays even use clothing to pay in installments or use credit cards that only need to be serviced a month later. These circumstances mean that the purchase of a new coat brings joy at first, but after a while it causes the bad awakening.

Internet subscriptions

Internet subscriptions

The internet is full of dangers. The most serious are subscriptions that are not recognizable as such at first glance and oblige users to make monthly payments over a long period of time.

Young people often enter into contracts online without even being aware of them. In the case of a number of offers, such as streaming pages or the downloading of software products, the small print only indicates that the user is subscribed and has to make installment payments for a period of 12 or 24 months.

In many cases, such subscriptions are invalid and the user is not required to pay. It is therefore advisable to always consult a lawyer for reminders and have the relevant contract checked. If only the small print refers to the conclusion of a contract, this is usually invalid and no payment is to be made.

The apartment

The apartment

Young people want to move out earlier and build their own lives. In many cases, however, the trainee salary is not even enough for a shared apartment. Many young adults therefore take out expensive loans to finance chic apartments in good locations and to become independent of their parents.

The five biggest debt traps for young people together mean that more and more young people in their early twenties are in a vicious cycle from which they can no longer find their own way. In most cases, it is advisable to consult a professional advisor. Many institutions offer free help and show ways out of the debt trap.

Repetitive indebtedness, when the loan does not pay?

The indebtedness of Czech households is constantly increasing. The largest percentage are housing loans and consumer loans. What do we borrow most often? It leads consumer electronics, then buying a car or motorbike, third place is the furniture for home and last but not least, the money is used for reconstruction. Other surveys show that every third Czech who borrows does so at risk. Where is the buried dog and how to prevent these problems?

 

Short-term loans, a good servant, but a bad master

Short-term loans, a good servant, but a bad master

Many people reach for a loan without a register almost wisely, even when a small problem occurs. On the other hand, there is no wonder, because it is the easiest solution, but it may not always be right. The stumbling block is often a tight budget.

Soon we will be surprised by a broken washing machine or dishwasher and there is a fire on the roof. No one in the neighborhood can help because family and friends have problems over their heads. What with this? Well, what you can do, so you borrow a few thousand before pay. The disadvantage of such loans is that they are only short-term, so they do not solve the problem in the long run, but only deepen it. What if the next month we are surprised by another unexpected expense and the maturity of the loan. Yes, we can extend it, but it will cost us more money.

 

Hammering the wedge with a wedge

There is nothing worse than borrowing to repay the previous debt. Think about it and don’t make it worse. Wouldn’t it be better to apply for bank consolidation? Simply put, you combine all disadvantageous financial liabilities into one. Not only will you pay a lower installment each month, but you will also save.

Nowhere are loans borrowed? Contact organizations that help people get out of difficult financial situations. As a last resort, consider personal bankruptcy.

 

Loan for uselessness

Loan for uselessness

Avoid repurchase goods such as mobile phones and other electronics. Our grandmothers were already saying “Buy only what you can afford”. A simple rule that works great in practice. Be aware that any loan in your life should take you forward and not lower you even lower.

 

Poor financial habits

Poor financial habits

How to prevent financial difficulties? First of all, one needs to be financially literate and able to use common sense. It sounds absurd, but a large percentage of us have significant problems with it, and it may be people whose income exceeds 50,000 USD per month. Knowing how to manage money is the very foundation that life cannot do without. Unfortunately, the school system will not teach us to save and treat them so that we do not get lost in today’s world.

Build a financial reserve every month to use for unexpected expenses and do without any loan. Reduce bad habits like smoking, drinking alcohol or expensive dinners in restaurants.

 

Loan? Only advantageously!

Loan? Only advantageously!

Even a short-term loan does not have to cost you a dollar. When looking for the right provider, take the time to choose a bid that suits you 100%. Sign the loan agreement only if you understand and agree to it.

Credit Card Debt Configuration News

In this article, we wanted to discuss the latest developments related to Credit Card Debt Configuration, which we frequently encounter in newspaper and television news. This time, due to the difficulty of individuals to pay their credit card debts with the statement made by Caroliner Bank; A new application has been launched that can meet short-term cash needs. We request you to evaluate the article.

The public bank to make disclosures for loan structuring.

mone loan

In this article, we wanted to discuss the latest developments related to Credit Card Debt Configuration, which we frequently encounter in newspaper and television news. “Building Credit Card Debt” briefly means the collection of credit card debts that are scattered among various banks in a single bank.

In fact, such practices were found in almost all banks under the name of “credit card debt installment” and were used by individuals. The individual was able to pay the total credit card debt according to the new interest rate and duration to be determined by signing a new contract with the conditions determined by the bank by applying to the bank where the debt was held. There may be differences in the practices of banks depending on their lending procedures.

This time, due to the difficulty of individuals to pay their credit card debts with the statement made by Caroliner Bank; A new application has been launched that can meet short-term cash needs.

Individuals will be able to collect their credit card debts in both Caroliner Bank and other banks under the name of ” Combining Consumer Loan ” within the body of Caroliner Bank with a payment plan to be created in accordance with their income. With this Credit Card Debt Configuration process to be carried out within Caroliner Bank, individuals will have the chance to collect their credit card debts in all other banks under more favorable terms with a payment plan that is in line with their income.

According to the statement made by Caroliner Bank, “Merger Requirement Loan” interest rates were determined as 1.10% monthly up to 24 months and 1.20% monthly up to 60 months.

Loan will be used for the payment of personal credit card debts

Loan will be used for the payment of personal credit card debts

Caroliner Bank and other banks by accepting upper limits. As of the same date, the loan amount will be limited to credit card debts to banks. It is obligatory for the credit needers who wish to benefit from the Combining Consumer Loan to cancel their credit card, which is paid within the scope of the loan. It is necessary to apply to Caroliner Bank branches for loan application. It should be kept in mind that 0.05% loan allocation fee will be charged while calculating the loan cost.

Lite Lender became the second public bank to make disclosures for loan structuring.

When the statement made by the bank is analyzed, it is understood that the announced loan configuration package is quite comprehensive. Good news for those who have difficulties in payment from Lite Lender:

The most striking feature of the loan support package announced by the bank is that it provides ease of payment to individual credit cards, as well as the structuring of personal and commercial loans in disruption and the resetting of commercial loan interest rates under follow-up. For the retail credit card payment convenience campaign, customers with urgent credit needs will be able to apply for December 2018 debts both in Lite Lender and other banks. In order to benefit from the credit support campaign, credit card limits and debts at other banks must be closed.

The interest rate to be applied up to 24 months is 1.10% and the interest rate to be applied up to 60 months is 1.20%.

money loan

Lite Lender has not forgotten the follow-up loan borrowers. In case of application until 30 April, if the customers with a loan under 100.000.- USD before the end of 2018 have been paid for follow-up, they will reset all their interest after the follow-up.As of December 31, 2018, Lite Lender organizes a 36-month, 3-month free payment campaign for individuals, and a 60-month free payment for 6 months for commercial customers. The interest rate to be applied in the campaign is USD. 0,98% for 100.000.- and below, USD. 100.001.- – USD. 1,25% for the 750,000.- range, USD. 750,001.- – USD. Within the range of 3.000.000.- 1.50% will be applied.

Credit Card Debt Structuring News In this article,

money loan

We wanted to discuss the latest developments related to Credit Card Debt Structuring, which we frequently encounter in newspaper and television news. “Building Credit Card Debt”, in short, means collecting credit card debts that are scattered among various banks in a single bank. In fact, such practices were found in almost all banks under the name of “credit card debt installment” and were used by individuals. The individual was able to pay the total credit card debt according to the new interest rate and duration to be determined by signing a new contract with the conditions determined by the bank by applying to the bank where the debt was held. There may be differences in the practices of banks depending on their lending procedures.