In a surprise move, the Reserve Bank of Australia reduced the benchmark interest rate in Australia recently, making it a historic low. The 2.25% interest rate decreased 0.25% amid concerns over the drastic shifts in oil prices in recent months and the need for an economic boost. Economists estimated that households would be able to save between $100 and $180 due to the reduction, giving some hope that consumer spending would increase, ultimately thwarting concerns of stagnation in the economy. Although some Australians are relieved with the interest rate cut, others are in need of a different kind of assistance – debt help.
Rising Prices Leading to More Debt
Over the last decade, the amount of revolving credit card debt as well as personal loan debt has steadily increased, despite consistent economic growth over the same period. While housing prices have also increased, income levels have remained nearly unchanged, putting some individuals and families in a hard to manage financial circumstance. According to Australian Bureau of Statistics, nearly 2 million Australians do not pay off credit card balances each month, representing 27 per cent of all credit card users. The interest rate on revolving debt is exponentially higher than that of housing debt or study debt, and as such can be nearly impossible to pay off when balances are not paid in full each billing cycle. No interest rate cuts have been made to credit card or personal loan debt, which would provide Australians the debt help they desperately need.
Instead, the interest rate reduction will be beneficial to those who either have little to no revolving debt or homeowners who have an opportunity to refinance or purchase a new residence at more cost effective rates. These individuals will have the opportunity to save on mortgage payments each month, allowing them to either save or spend the additional funds which both benefit future economic growth. However, for those families that are unable to keep up with outstanding debt payments where interest rates are at all-time highs, the recent interest rate cut will make little difference and will not provide for any type of help in the short or long run. Instead of a cut on lending rates for property, more individuals would benefit from debt help in the form of lower rates for other credit obligations.
Debt Help
Although lower interest rates can mean accumulated savings for homeowners or those with few other debt obligations each month, those struggling to keep up with repayment terms on other types of borrowing are not getting the help they need. Luckily Australian Debt Agreements helps everyday Australians get out of debt fast through debt agreements and get back in control of their finances. Contact Australian Debt Agreements today to find out how you can be free from debts quickly and efficiently.