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07 September 2008 :

Small borrowing: is a loan the best option?

by compareandsave.com Editors

You need £3000. What do you do?

A number of options are available to you depending on what you need the money for i.e. if you need it for existing debt consolidation or to go out and buy something.

If you have outstanding balances on several credit cards, and want to make it easier to keep track of your debt and repayments, the obvious choice might be to take out a loan because they have lower APRs, right? But, this may not be the case.

Moneyback Bank currently offer the lowest typical APR on an unsecured loan at 6.7% subject to status. However, if you wish to borrow £3000 you will be repaying the loan at 7.8% APR (more about Typical APRs).

So, what other options are available? Another idea might be to transfer the balance(s) to 'a life of balance' credit card like the one offered by Barclays with an APR of 5.9%, which will stay the same until you have paid off the balance.

If you need the money to go out and buy something, a 0% purchases card might be the solution for you. These cards offer you a fixed period where no interest will be charged on the balance you owe. This would work best for you either if you knew you could pay off the balance within the fixed interest free period (normally ranging from 6-14 months) or are willing to reconsider your situation after the period ends or, otherwise, start paying interest on your balance.

04:59 PM | Categories: Debt, Money, Credit Cards, General Hints & Tips, Loans

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Britain’s Increasing Personal Debt

by compareandsave.com Editors

Britain’s personal debt is on the increase at an estimated rate of £1m every 4 minutes. At the end of July 2007, it had reached a massive 1.3 trillion pounds. Lending companies are becoming more aware of the growing problem and are starting to take precautions. Barclays are one of the first leading lending companies to take action. They have reduced the amount consumers can borrow, not just with new customers but with existing one too. Over 500,000 customers have either been given limited amounts or been turned down all together, as lending criteria has been made more difficult. Customers who have been given limited amounts can increase the amount borrowed by proving they can cope with the debt. Cash withdrawals have also been limited.

All these things have been put in place to help cut the amount of bad debt there is, as many people struggle to pay the money back. Research carried out by Moneysupermarket shows that over 12.7m people have taken out loans to consolidate their debts, however 8.4m people just end up increasing the amount they had in the first place.

It has been made easier for lending companies to keep track on individuals financial activates as they can now share data between lending companies, through the new industry database, it provides them with information about the credit rating for each individual, it also shows if they are applying for multiply cards, which can indicate they are having debt problems.

It won’t be long until other lending companies take on board the issues of the ever increasing debt problems Britain is facing.

12:00 PM | Categories: Debt

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