Recent figures show that Israelis take on more personal debt than any other nation, outspending their income by 156%. Research by the Taub Center showed that the average debt for 25- to 29-year-olds was NIS 150,000 ($42,000) compared to NIS 315,000 for those 50-60 ($89,000).
The danger of accumulating so much credit card and personal finance debt is the burden of passing this onto your children or close relatives. Whilst the idea of borrowing more might seem like a simple solution, there are some other effective alternatives.
Consider credit unions
If you have a bad credit score due to a history of bad debt, you could look at joining a credit union in order to be able to access a cheap personal loan.
Credit unions are co-operatives that are locally and independently run, and they aim to help people who may not otherwise have access to certain services and financial products elsewhere due to their credit history or background.
In the UK, there are approximately 300 credit unions to choose from, all of which provide loans, current accounts, and savings options. However, keep in mind that every credit union has its own set of rules and services that determine who can join them such as you usually have to be a member of an organization or work in the public sector.
Credit unions are not savvy high street banks or lenders, access to funds can be slow – but the rates are the lowest around and unions do not usually charge default fees or late charges.
Think about remortgaging
Remortgaging can also be another option for you to help you overcome debt. Whilst you need to keep in mind that a mortgage still remains a loan on your property (and if you cannot keep up with repayments, the lender in question can take back the house) it can offer you cheaper rates than your existing mortgage and you can also borrow money against your home and combine the payments into your ongoing mortgage.
Accordingly, the homeowner replaces an existing mortgage with a new one. This could mean that the homeowner decides to change products with the existing mortgage provider, or decides to switch to another one completely.
Remortgage may be a good option for you as a homeowner trying to overcome debt as it could help you to release equity that is tied up in your property. If you remortgage, you could get the equity as a lump sum, enabling you to repay outstanding debts.
In the UK, there were a whopping 469,000 remortgages in the period dating from July 2018 to June 2019, with a total value estimated to be around £84 billion.
Debt consolidation loans
If you are considering debt consolidation loans, this enables you to pay off existing debts you have, and the total amount owed is transferred into just one loan, which you repay back on a monthly basis.
Whilst it is still necessary for you to pay back the money outstanding, a loan consolidation is a more practical way of paying off lots of outstanding credit cards, bills and loans – helping you eventually get debt free. You also save money because this should help you pay off your debts on time, and avoid any late charges.
Balance transfer credit card
Balance transfer credit cards are another potential alternative financial product for you to help tackle debt issues. They can help you to reduce the cost of your credit card borrowings, as well as help you to consolidate a variety of debts.
A balance transfer means that you move either all, or some of a debt from one credit card to a new credit card. Balance transfers often come at 0%, so if you have a few thousand in credit card bills to pay, at least it will be interest-free.
However, it is still important that you repay your debt on this balance transfer card prior to the introductory interest rate period runs out (this is usually a period of one to two years in total) as it is unwise to assume you will definitely qualify for another balance transfer deal after this one has finished.