Friday 4th of September 2009
There is a large amount of credit card and personal loan debt still dragging the finances of Britons down, a claim suggests, which could be reduced by an individual voluntary arrangement (IVA).
Commenting on the recent Credit Action report, Peter Sargent, president of R3, says an increasing number of people are putting a large amount of money towards their mortgage repayments while the base rate remains low.
In order to then cover everyday expenses, they have to rely on credit cards to cover the costs, he explains.
Topping up credit card debt could lead to financial difficulties that require the help of an IVA, as the interest rate of plastic does not mirror the current base rate of 0.5 per cent.
"People quite frankly need to stop borrowing money right now and begin repaying their existing debts and the best thing to do is pay off your most expensive debt first," Mr Sargent advises.
Indeed, using an IVA to freeze the interest on credit card debt could be ideal, as lovemoney.com also recently advised Britons to pay off their biggest debts first, which tended to be credit cards.
By Kimberley Parsons
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVA answers to help young women save?
