Towards the end of last year, UK citizens reportedly ran up the highest amount of debt since 2007. In November, heading towards the festive season, a collective 1.25 billion pounds was borrowed. The amount of 1.25 billion pounds was apparently mostly unsecured personal debts. The debts were in the form of payday loans, short-term high-interest loans, credit cards, credit cards and store cards. Nationaldebtline and StepChange are worried about the way people are relying so heavily on credit. These charities expect that, with the trend of borrowing so heavily, they will have more and more people knocking at their doors asking for help on how to manage their overwhelming debts.
Now, in 2015 credit is much easier to obtain that it was in the leaners years of 2009 and 2010 when financial institutions were very tight-fisted. Credit providers are actively trying to sign people up for their credit. The trade body for people working in the insolvency sector, R3, has completed research showing that one-fourth of British adults had plans to take out credit to help pay for their overspending over the 2014 festive season. 50 percent of those had hopes of using their credit card and 24 percent were planning to appeal to their bank for an overdraft. 14 percent were planning to finance their festive spending with store cards. Payday loans and new credit cards were other ways of paying off debts.
Banks are coming out of hibernation once again and they are desperately trying to sign up new customers. Banks are focusing on getting customers to move their debt from other banks and in order to achieve this they often have to take on the customer as well as his existing debt. Not only are banks taking on customers with existing debt but they are offering these same customers increasingly long interest-free loan periods in order to win the customer over. Lloyds Bank and Halifax have recently launched a marketing campaign offering zero interest over a 34 month period to clients switching to them. Barclaycard had beaten them by already offering zero percent for 35 months.
Back in fashion are personal loans when a mere six years ago it was almost impossible to secure a personal loan from any bank. It is possible to find a bank willing to offer you a loan for a mere 3.9 percent as opposed to the 7 percent of just over two years ago.
Tough times come and go but when times look as if they are improving it is prudent to put a little away rather than over-spending on luxuries during the festive season!