High interest rates - debt solutions

The UK government has launched a consultation over excessive interest rates charged on credit and store cards, which often leave people looking for debt solutions.

The coalition are undertaking the inquiry as part of their review in consumer credit in the UK, and are believed to be considering putting a ceiling on just how much consumers can be charged.

People already struggling with debt who have to then make high repayments, often turn to debt solutions such as an IVA, rather than facing bankruptcy.

Consumer Minister Ed Davey, said he wants to encourage both customers and lenders to take responsible decisions, while protecting consumers where necessary.

Kevin Still from Atlantic Financial Management says, "We believe one of the real issues is not the headline interest rate when the credit is taken out, but the subsequent increases in rates once debt is built up on the cards.

UK consumers can quickly find themselves in a debt spiral where they are only paying interest and nothing of the debt balance.

A debt spiral remains the second most common debt reason for someone starting an Atlantic managed debt solution."

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