Inflexible friends and plastic assets, why money isn’t buying love anymore

Released on = June 30, 2005, 1:43 am

Press Release Author = Rachel Lane

Industry = Financial

Press Release Summary = UK consumer debt continues to spiral out of control, with a 30% rise in bankruptcies

Press Release Body = Consumers reject financial advice in favour of financial frivolity

It would appear that even though their “friends” aren’t as flexible as they used to
be, consumers are still stretching their credit cards beyond the comfort zone.

The vicious circle of debt manipulation involving banks, consumers and commercial
credit companies is putting consumer spending under strain, as funds begin to dry
up. In May 2005, the Financial Times reported the accusation that banks were
fuelling Britain’s personal debt problem by repeatedly offering debt-ridden
customers loans they were unable to repay.

As the UK’s personal debt increases by £1 million every four minutes, credit card
spending habits still seem to be spiralling out of control. According to Credit
Action, nearly 66% of the adult population have a credit card, with multiple card
holding becoming a growing phenomenon in the UK. More than 60% of card holders
possess at least two cards, with 10% holding at least five cards. There has also
been a significant rise in the number of personal bankruptcies. In the year up to
March 2005, 37,886 people were made bankrupt, a 30% increase on the previous year.

Credit Action reported that some credit card companies reduced their minimum
repayments from 3% to 2% last month, which has been seen by some as irresponsible.
To put this into perspective, a £3000 credit card balance at 17.9% APR would now
take more than 40 years to repay if the minimum repayment of 2% is paid each month,
in comparison to 19 years with the 3% minimum repayment. Barclays even warned of
falling profits for the Barclaycard credit card division last month, as more
customers missed repayments and bad debtors increased.

For those consumers with regular incomes and strong credit records, credit cards
with APRs as low as 6.9% are available, that’s less than half the standard APR most
consumers have to pay on the cards in their wallet. By just using a variety of
online personal finance tools, consumers can save themselves considerable grief by
undertaking some financial homework.

In the UK, a variety of websites are available to compare credit cards, loans, life
insurance, car insurance, mortgages, savings accounts, Child Trust Funds and current
accounts. With just a few clicks of the mouse, a trusty search engine and a clear
definition of the relevant search terms, such as “credit card guide” or “loans
guide”, the consumer can have swift access to a number of useful research sites
including moneynet.co.uk, moneyfacts, moneyextra and moneysavingexpert. These
companies are specially set up to provide impartial consumer information and by
using them for personal finance research, the consumer could effectively save
thousands of pounds by choosing the most appropriate credit card, loan and mortgage
accounts, not to mention securing good deals on car insurance, life insurance,
travel insurance and household insurance.

For further information on the companies included in this article:
http://www.moneynet.co.uk/
http://www.creditaction.org.uk/
http://www.parentspenniespounds.co.uk/
http://www.moneysavingexpert.com/

Web Site = http://www.cashzilla.co.uk/

Contact Details = Rachel writes for the personal finance blog Cashzilla.