Wednesday 13th of January 2010
Individual voluntary arrangement (IVA) questions could be on the lips of more credit card users after the Bank of England reveals the soaring rate of interest.
The organisation reports that the average interest rate on credit cards increased from 15.89 per cent to 16.28 per cent in December, something an IVA could prove to be of assistance with.
An IVA freezes the interest rate on unsecured debt such as credit cards, allowing those in debt to make repayments that are not constantly fighting against climbing interest levels.
The average credit card interest rate marks a significant difference from the current official base rate of 0.5 per cent - which could highlight how the base rate has not brought joy for Britons who rely on plastic.
Interest charged on personal loans and overdrafts also soared, the Bank of England says. Rather than battling to keep up with interest repayments, borrowers could be best using an IVA to freeze unsecured debt so they can start paying back what they owe.
PricewaterhouseCoopers previously warned: "Credit will become more expensive as lenders attempt to claw back revenue lost as a result of economic and regulatory pressures."
By Hayley Jones
- 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
- Mortgages over 100% 'should be banned'
