Thursday, June 7, 2007

What causes an increase in consumer debt.

  • Lower Real interest rates. Low interest rates mean that loans are more attractive; therefore, it encourages a variety of borrowing, such as credit cards and loans.
  • Confidence. Consumer confidence is important for encouraging people to borrow against the expectations of future earnings.
  • Economic Growth. Higher economic growth tends to increase consumer confidence. When incomes are rising, people expect them to keep rising
  • Supply of Finance. Greater supply of loans and credit cards. Banks more willing to lend to people with bad credit histories.
Record Debt levels threaten UK economy

1 comment:

Nes Oidem said...

can i quote you on your article "what causes an increase in consumer debt." ?
I am writing a book on Climate change and consumer debt as a twin global crises.
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