Wednesday 20th of January 2010
Millions of Britons have entered 2010 reliant on credit for everyday living costs, a new report claims, although an individual voluntary arrangement (IVA) could slowly ease people away from this financial crutch.
Almost 40 per cent of adults intend to use their credit cards this month for purchases such as supermarket groceries, according to the Post Office Consumer Credit Report.
This could indicate that such a reliance on plastic for small buys is simply storing up serious financial trouble for the future, especially if annual percentage rates on cards continue to rise.
Credit card-reliant consumers could find an IVA answers their need for plastic. IVAs can freeze the interest rates on unsecured debt and merge different credit card balances into one, monthly repayment.
By making credit card debt more controllable, Britons could gradually ease their way out of debt and no longer rely on credit for everyday costs.
"Whilst the recession has left many with no choice, these debts build up quickly if not paid off in full each month and can be extremely costly over time when interest is added," says Post Office head of lending Az Alibhai.
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
- IVAs may help Britons overcome savings hurdle
