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Debt management weekly round-up

15/01/2010

It's the end of the week, and time for another look at the stories that have been affecting your pockets over the last five days.

On Monday we had the news that one million Brits were paying their mortgage or rent on credit cards.

The finding from YouGov on behalf of Shelter was described by the charity as "shocking", and outlined the difficulty families are having making ends meet in the current economic climate.

We then heard that the Nationwide Savings Index dropped to its lowest level since its introduction in May 2008.

The finding indicated the impact of Christmas spending on consumers' bank accounts – revealing that one quarter of people are not putting any money away at present.

And there was more debt misery, as Bank of England figures showed that credit card interest rates rose last month to their highest in over three years.

This is an increase of almost half a per cent year-on-year, and comes despite the base rate falling to its lowest level on record during that period.

On top of this, record low temperatures have hit Brits' pockets hard. According to research from Energyhelpline, UK families will pay £1.9 billion in extra heating charges if the cold snap continues into next week.

This would add an average £70 to each bill this January – making it 52 per cent more expensive than the same month last year.

Finally, and perhaps most worryingly of all, findings published today revealed that 100,000 consumers used illegal loan sharks to fund the holiday season.

This left them subject to a shocking average interest rate of 825 per cent APR.

To highlight the true cost of this, thinktank the Financial Inclusion Centre believes a total of £82 million will be eventually paid back to the lenders. This is significantly more than the estimated £29 million that was originally borrowed.

However, a recent Association of British Insurers' (ABI) survey found that debt repayment is taking precedence over savings. 43 per cent of people expect to pay off their unsecured debts faster in response to the current climate, up from 34 per cent a year ago.

And that's all for this week. Have a great weekend, and we'll have more stories to bring you next week.
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