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Debt in the Uk hits crisis levels - Money Advice Group

Thursday 20th March 2008 - 22:46

Debt in the UK has hit crisis levels and thousands of UK consumers are opting for debt management/debt re-structure plans to help resolve their financial difficulties. Research has demonstrated, that by only paying the minimum amount on debt can lead to more than 30 years of payments towards credit cards and debts.In terms of debt management, there are few worse things you can do than just pay of the minimum amount on your credit cards. Research conducted by uSwitch.com has discovered that by doing this, they are running the risk of being in debt for in excess of 30 years. A debt management plan is a good way for those with multiple debts to restructure their repayments into a manageable amount and can be good for pulling away from spiralling debts.

Debt Management – Credit card trap

On of the contributing factors for the increased levels of debt is the continued spending of the consumer and the acceptance of paying only the minimum amount towards credit and perceiving a credit limit as “spare” cash. A debt management plan is a good way for an individual to make their debts more visible and provides a structured plan to repay debts. Most credit cards place a minimum monthly repayment of around 2.6% but by simply paying off this amount, an individual will invariably end up accruing further debt. For those serious about their debt management, paying off their credit cards in full wherever possible is a much more viable option. The research carried out by uSwitch.com discovered if someone had an average credit card debt of £1,812 and repaid their debt at the average of 2% per month it would take them just over 29 years to pay off their debt and they would accrue an interest of just under £3000 during this time.

Debt Management – Lack of understanding

One of the fundamental reasons that UK consumers opt to repay only the minimum amount is due to a lack of understanding regarding the consequences. Mike Naylor of uSwitch.com states “Despite the introduction of 'health warnings' on credit card statements, the implications of making the minimum repayment each month are still not clear enough to consumers”. The ramifications of this will see many consumers experience spiralling debts and the real threat of bankruptcy or insolvency. For those who find themselves in this situation, many will opt for a debt management plan in order to get a handle on their finances and to return to a firmer monetary footing.Lee Parkin of the Money Advice Group saidA simple change in circumstance or even a major event in an individual’s life can change a person outlook and affordability. Whilst Credit is taken out in good faith and deemed affordable, the debt repayments can become difficult if a person has a change in circumstances such as a change of job, unemployment, relationship breakdown etc. It is always best to take financial advice early as a swift action plan can be more cost effective and stop debt getting out of control 

Speak to Money Advice Group about Debt Consolidation

Money Advice Group are debt solution experts who offer a range of options to those in financial difficulty. Money Advice Group use fully trained debt advisors to ensure they find the right financial solution for you. Financial solutions from individual voluntary arrangements (IVA) to debt consolidation are offered and Money Advice Group can consolidate your debt into one single affordable monthly payment. To find out more about the IVAs, debt consolidation and other financial solutions on offer from Money Advice Group just call the freephone 0800 280 0492 or email enquiries@moneyadvicergoup.co.uk.

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