In the UK alone the amount of household debt now sits at over £170 billion! Spurred on by cheap money a record number of people are being lured into splashing out on home improvements, cars, goods and services, by credit card companies and banks.
Over £41 billion is now owed on credit cards, coming from long sweetener interest free deals and credit card transfers, removing interest payments for up to 3 years.
Consumer credit on the high street is now up to £84 billion with £36 billion made up of personal loans and £7 billion in overdrafts.
New car sales are at record highs, as is the financing of new cars. Over 75% of new cars bought in the past year were financed through a loan.
With a possible rise in interest rates, many people are sitting on a ticking debt time bomb, in the past year alone Citizens Advice has dealt with nearly 300,000 cases of people struggling with debt.
If you are dealing with debt or don’t want to be caught out when interest rates go up, here are a few simple steps that can greatly help –
1 – Face your debts and make a list of everything you owe.
Remember don’t panic, there are others in the same boat, and organisations to help.
2 – Prioritise your debts into order of most importance.
Top priority debts are those that put your home at risk such as mortgage or rent, council tax etc. Low priority are credit cards, loans from friends etc.
3 – Work out a monthly or weekly budget.
Write down your income and expenses (excluding debt repayments) to work out how much you have left to pay your creditors.
4 – Speak with your creditors.
They are more likely to help if you contact them and explain your situation. Most will accept reduced payments to help you pay the debt off.