Tuesday 24th of November 2009
An individual voluntary arrangement (IVA) could be required by Britons who have taken on unsecured personal loans, after one money expert explains double-digit interest rates are currently a common problem.
Speaking to the Aberdeen Press and Journal, independent financial planner Tim Twiddy says as well as high interest repayments on loans, households also have to battle credit card commitments.
If outstanding credit card balances are not paid off every month, households could face up to 20 per cent interest rates every year on such borrowings.
"As far as credit card debts go, it is no longer a simple matter of switching your debt to another card company and going on to a zero interest rate for a while," he advises.
Rather than piling debt on to more plastic, Britons may decide to make headway with repayments by following an IVA agreement.
An IVA can merge all credit card balances into one more manageable, monthly repayment, while high interest rates can be frozen, relieving some of the financial burden.
Mr Twiddy adds that the credit crunch means lenders are now cautious about who they accept on to zero per cent deals - meaning an IVA could prove to be a more ideal solution for households in debt.
By Mark Waterman
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