How is the economic recovery impacting consumers?

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How is the economic recovery impacting consumers?

Despite the UK nearing the brink of economic recovery many consumers are still turning to credit borrowing to boost their household funds.

Figures from the British Banker’s Association revealed that borrowing grew by 6.7% across the year overtaking increases in personal loans and overdraft borrowing. When these figures were broken down, credit card spending was found to make up a large share of unsecured borrowing growth in August, with consumers putting £8.4 billion of their purchases on their credit cards.

Many consumers have turned to keeping their partners in the dark about their credit cards, of this group over 26% has kept their other half in the dark about their debts accumulating as much as £1000, another 8% had failed to tell their partner that their credit card debt amassed to over £5000. Consumers are not carrying cash, with debit and credit cards being accepted for the smallest of payments, new research from thinkmoney revealed that just 6% of adults had cash on them when asked, with men carrying an average of £27.10 while women carried an average of just £20.50 in cash. There are a limited number of place that do not accept these cards with even taxis, pubs and parking machines taking them. This does however mean people are much more likely to forget how much they have spent in a day with all the little things adding up to make one large sum.

There are many forms of support to help you tackle your debt and how to avoid debt whether it be large or small.

There are various ways to avoid and deal with short term debt, these include avoiding payday loans, making use of your overdraft facility, looking at getting a credit union loan or a budgeting loan and also getting a 0% balance transfer credit card.

• Avoiding payday loans which are fixed rate, high interest loans is easier when you realise how much they actually charge, with their interest rates often exceeding 1800% APR whilst credit card interest rates are only 20% APR. These services can often lead to debt accumulation with the interest rates being combined with late payment charges, the companies can also call numerous times a day if you do miss a repayment, these can be frustrating and upsetting especially if you cannot see a way out.

• Your overdraft will usually have much lower interest rates ranging from 12%-25%, you can get your overdraft granted the same day you apply but can pay it off over a more reasonable amount of time.

• Credit Union loans do not function for profit and do have lower rates than payday loans, they offer long term secured loans and also short term loans with low interest rates. These are a good idea if you want money fast but without having to worry about it becoming an unmanageable.

• The other option is a budgeting loan issued by the government for those struggling to cover their essential expenses, they are available to those on benefits so that they can cope with any debt that has built up. These loans are interest free and repayable over a two year period but there is a maximum payment of £1500.

• Lastly there is the option to get a 0% balance transfer credit card, this should be taken out with a reputable bank and most can offer you an interest free period which will allow you to pay off debt such as utility bills without having to pay it back immediately. Following the interest free period the interest will go up but it will be at a manageable and fixed rate leaving you with no surprises.

 

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