Friday 10th of September 2010
It can often seem an impossible task clawing yourself out of your overdraft. And this is much worse when you have other escalating debts to deal with at the same time.
Information on individual voluntary arrangements (IVAs) may, however, show you it's possible to get your finances under control and start freeing up indispensable income.
According to figures from Moneyfacts.co.uk, some 26 per cent of current bank accounts have witnessed a rise in their authorised overdraft rates over the past 18 months, all despite the Bank of England base rate staying as it is.
Those with a Barclays Additions Active deal may have been hit hardest, with an 8.4 per cent rate rise taking place over the same period of time.
The jump means those with a £1,000 overdraft have had to deal with yearly overdraft costs going up from £28 to £211, the organisation states.
An IVA could, though, be useful for those of you who owe a lot of money on overdrafts and unsecured financial products.
That's because the method of insolvency chips away at the money you owe on credit cards and personal loans over a period of around five years, demanding a lot of hard work and discipline but offering the chance to emerge completely debt-free at the end of the process.
And, depending on your specific situation, it may be more favourable than bankruptcy, which doesn't protect the equity on your home, requires details of your money troubles to be published in the local newspaper and may block your route into certain careers.
IVA info may also show you although the measure can't help with money owed on overdrafts, it could help you free up more of your income to put towards paying that off too.
Michelle Slade, spokesperson for Moneyfacts.co.uk, "While the majority of customers use an overdraft as a buffer facility, some have no alternative but to regularly push their overdraft to the limit.
"It is those customers that will be hit hardest by increases, which will only serve to make a bad financial situation worse."
By Ashley Littley
- 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
- Equity release 'vital' in economic downturn
