Helping People Who are Over-Reliant on Credit

Beneficiaries should rely on a specialist’s advice when dealing with high amounts of debt.

There is nothing wrong with taking out a loan for example installment payday loans, as long as they are paid off appropriately. Those who have begun a pattern of over-reliance on debt should consider the following options before they need a specialist to help them meet debt consolidation:

Lowing the Amount of What’s Borrowed Now and in The Future

Those who run into small financial emergencies should look to the appropriate credit unions, rent-to-own providers and Community Development Financial Institutions for help with the financial emergencies that are run into. Those who use a rent-to-own service, like Fair For You, tend to have less debt and experience an eased sense of mind compared to those who used a competitor. Not everyone who struggles with an excess use of credit has these options available to them. They may not meet their needs either. Those who use Credit Unions often save, but you may struggle to find one if you haven’t been with them in the past. They’re also slower at transferring funds than high-cost lenders. 

Managing Variable Income with Outgoings 

Helping people manage their day to day expenses can lead to infrequent costs that require a high amount of credit to cover. The Supported Rent Flexibility Pilot evaluated and run with the Centre for responsible credit attached to the Optivo Housing Association, showed that those who under-pay for their rent in months that require the renter to dish out more money reduced rental arrears and lowered the use of credit for needed shopping and helped improve wellbeing. 

It’s Time to Interrupt Bad Spending and Borrowing Habits

Consolidation loans led to little relief according to research, those who took out a loan refused to change their spending behavior. It created a financial environment were credit balances continued to rise for the spender. Changing deeply rooted behaviors that enable bad spending helps tackle credit use issues. It’s a big question to tackle right now; however, these two examples help inform us of the benefit that behaviorally-informed interventions can have to create better repayment behavior:

Sliders – Avoiding the minimum payment suggested by the lender with sliders displaying different amounts along a scale can help reduce the length of loan repayment and take off some of the interest that comes with longer length loans. 

Card controller – Spending can be curbed by making over-spending harder. As an example, setting it up so that someone has to send a text to override the limit can make it easier to stick to a budget.