Saturday 16th of January 2010
Individual voluntary arrangements (IVAs) could be increasingly used for credit card debt which has spiralling interest rates attached to it.
Credit Action reports that the Bank of England’s revelation that average interest rates on credit cards have risen from 15.89 per cent to 16.26 per cent could be enough to push borrowers over the edge.
Once people are tipped into debt, it could be difficult to get out. Credit card users may find an IVA answers this struggle.
IVAs freeze the interest rates on credit cards. People who owe money to a number of different lenders will only have to contend with one monthly repayment at a frozen interest rate, which could take some of the pressure off.
Direct of Credit Action Chris Tapp says: "We are still an economy that is reliant on credit and we are still a society that loves to use credit."
He adds he does not think the rise in interest rates will put people off borrowing. Rather than relying on more credit, Britons may want to make headway into debt by using an IVA.
The latest Credit Action report found the average UK adult owes £30,226 when mortgages are included.
By Kim 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 information could help consumers in despair
