Credit crunch affects debt consolidation options
Released
on: September 30, 2008, 8:45 am
Press
Release Author: Debt
Advisers Direct
Industry:
Financial
Press
Release Summary: One year after the start of the credit crunch,
it’s more important than ever that consumers consider their
options before taking out any new credit, say debt consolidation
experts DebtAdvisersDirect.co.uk
Press
Release Body: Commenting on recent changes to the credit market,
debt consolidation experts DebtAdvisersDirect.com
reminded consumers in debt of the need to think carefully about
the lending options open to them. In particular, they stressed
the importance of calculating the long-term impact, not just the
short-term appeal, of various types of credit on offer.
“As
with any financial issue,” a DebtAdvisersDirect.co.uk
spokesperson remarked, “it’s imperative to research
the different options thoroughly before making any firm decisions.
The pros and cons of each debt solution might not be immediately
obvious, so it’s highly inadvisable for anyone to commit
themselves without consulting an expert beforehand.”
In
recent history, the availability of credit has led many to see
debt consolidation loans as a good way of regaining control of
their finances. However, the credit crunch has – by definition
– restricted the number of ways in which consumers can consolidate
their debts.
A
recent press release by comparison site uSwitch
provides some figures: over the last year, the overall amount
issued in unsecured loans has dropped by £283 million per
quarter, while gross credit card lending has grown by an average
of £179 million per quarter.
“This
is a disturbing trend,” the Debt Advisers Direct spokesperson
continued. “People clearly need access to credit, whether
they’re using it to consolidate their debts or to finance new
projects and purchases. Yet the way in which they access that
credit can make an enormous difference to their financial stability.
“One
reason people turn to their credit cards is the sheer simplicity
– rather than arranging a new loan, they can simply access
the credit that’s already available on their credit card.
However, the high interest rates that come with some cards can
rapidly turn relatively small debts into much larger ones.
“At
the same time, the low monthly repayments that most credit cards
require (another factor which might add to the perceived desirability
of borrowing in this way) can also have a dramatic impact on a
borrower’s long-term finances – any online calculator
can easily demonstrate the advantages of repaying a debt as fast
as realistically possible, whether it’s a credit card debt,
a debt consolidation loan, or any other kind of credit.”
In
the uSwitch press release, Simeon Linstead,
head of personal finance at uSwitch.com, stated
“…it seems consumers are turning to credit card
providers for extra cash. Whilst it’s good news that people
can still access extra money if they need it, this is not a sustainable
solution for the problem.”
For
many, a professional
debt consolidation loan would be a much more appropriate way
to bring their finances in order. Often coming with much lower
interest rates than credit cards, loans can also offer the peace
of mind that comes with fixed monthly payments over a specified
repayment term.
“Even
in the midst of the credit crunch,” the Debt Advisers
Direct spokesperson concluded, “debt consolidation
loans are still very much available. Whatever their debt
problems, many borrowers still stand a good chance of getting
the debt consolidation loan they need – as long as they approach
a lender who specialises in helping people in their situation.”
Web
Site: http://www.debtadvisersdirect.co.uk
Contact
Details: Melanie Taylor
melanie.taylor@debtadvisersdirect.co.uk
0845 056 6480
Pennington
House
Carolina Way
South Langworthy Road
Salford
Greater Manchester
M50 2ZY
2012
