Monday 21st of September 2009
Personal loans and credit cards can be useful during times of need, a claim suggests, although poor debt management of such financial sources could land households seriously in debt.
Speaking to the Guardian, David Black, banking specialist at Defaqto, says in times of emergency such as a boiler breakdown, many people will not have enough spare cash to cover the cost of repair and as such, unsecured credit can prove useful.
However, if households regularly have a small disposable income once debt commitments have been met, turning to the support of a debt management plan could be better for long-term stability, rather than relying on credit cards and personal loans.
A debt management plan can extend the repayment periods of debt. This could mean households can make smaller monthly contributions, placing any spare cash into a savings account for future crises.
"For some reason, many people think that debt has become a dirty word over the course of the last year or so, but, treated responsibly, it remains a natural ally and a useful tool in today’s society," Mr Black insists.
However, the fact that the average UK household debt stands at over £58,000, according to Credit Action, could show how credit cards and loans can lead to a slippery debt slope.
By Mark Waterman
