Why people into debt?

The reasons for the indebtedness of the people vary greatly, but point out the most important causes.

Procurement of goods and services which are generally not obtainable with current income of individuals. This is called "leverage."

Acquisition of financial assets: in Venezuela is very much in fashion buying debt bonds, so some banks are financing the purchase of the same to the persons and companies involved.

Inability of being unable to bear the usual costs by the income it receives: this is what we call below net cash flow negative. In these cases, it is usually resorted to the use of credit cards or personal loans.

Emergencies: Accidents, illness, unforeseen repairs to the house or in the vehicles can significantly alter the budget of many families bringing the debt.

Lack of control: some people, and without the false sense of power that gives credit cards, incurring unnecessary debts. This is reflected in regular high balances on credit cards.

Existence in the country of negative real rates, this means that banks offer interest rates for instruments of deposits, less than inflation, so people know intuitively that you purchase goods and services (first through money Cash and second through debt) in order to withstand the impacts of inflation.

Reduction of lending rates of interest: Complementing the previous section, low interest rates on loans to motivate and encourage people and businesses to borrow.

Obtaining bank references: Some people apply for credit cards bank for future contingencies, such as a house purchase. It is well known that hardly a bank grants loans for a significant amount of money if the person or company has no bank, especially credit cards.

Chargeability tenure travel: Many hotels, car rental agencies, clinics, and others, it requires a credit card customer, so do not possess it can bring problems to the person at the time of travel or have an emergency.

Extraordinary circumstances: for example, Christmas, weddings, birthdays, dismissal or resignation of the work.