What is the credit crunch?

[Slade]

So I am on a bit of an article spree today :)

Just found this one that I figure may be useful to those of you who aren't sure what is happening in global markets that is causing so much turmoil.

The credit crunch explained | NEWS.com.au (http://www.news.com.au/business/money/story/0,25479,24100335-5017313,00.html)

So, how are you affected by the credit crisis? directly? Indirectly? Are you doing anything to combat it?

[The Y-man]

Main effects seem to be Interest Rates - getting high.

We have sold of some of our investment assets to pay of our most expensive loans.

We are actually rolling over credit card bills, as CC companies offer very attractive rates (eg 7.99% for life of loan at AMEX). This is cheaper than our home loan (almost 9%), so it makes sense to use the money that would have paid the cc off, to go into the pricipal of our home loan instead.

Cheers,

The Y-man

[The Y-man]

Main effects seem to be Interest Rates - getting high.




Interesting to note almost half a year later - interest rates have eased - HOWEVER, getting loans seem to be heck of a lot harder. In fact, try getting a limit increase on your credit card - you might be surprised how reluctant some companies are....

The Y-man

[Brendan]

That's true, it will be interesting to see if Australian interest rates will fall as far as the UK/US, I personally don't think they will. I believe that they will fall again but not considerably - possibly 2% or so.

I think its not to bad that its harder to get credit these days, it was waay to easy to get credit previously, I had friends that were earning $500 a week buying 50k cars with ease, getting store cards like they were going out of fashion, and holding on to numerous credit cards with little ability to manage their funds correctly to pay any of them off.

Hopefully now regulations will tighten just enough to stop that from happening, but to allow real investors and people who can properly manage their funds to borrow as per usual.

[urlelove]

I'm new in this world.

:D


I want to know more about this credit crunch...

[matinfisher]

They may also find that their debt becomes more expensive and difficult to manage. The credit crunch is affecting consumers and financial services companies, which undermines the least profitable and difficult to access.

[vanessalane]

Re:What is the credit crunch?

An economic condition in which investment capital is difficult to obtain. Banks and investors become wary of lending funds to corporations, which drives up the price of debt products for borrowers. Credit crunches are usually considered to be an extension of recessions. A credit crunch makes it nearly impossible for companies to borrow because lenders are scared of bankruptcies or defaults, which results in higher rates. The consequence is a prolonged recession (or slower recovery), which occurs as a result of the shrinking credit supply

[aapkae]

interesting site and good piece of information in there