Record numbers seek debt help in 2016, warns charity

Over 300,000 owing an average of £14,000 each turned to StepChange for help between January and June...
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'Record numbers seek debt help in 2016, warns charity'
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  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    Low wages and high rents are certainly one of the contributors to high unsecured debt but also lack of education on budgeting and money management. Giving someone 6 months interest free will certainly give some breathing space to those unfortunately struggling with debt but I fail to understand why credit card companies are still charging high rates when interest rates are so low. I am even more staggered that people will pay those rates in the first place.

    I am not sure how this will improve to be honest either. Outlawing zero hours contracts may be a start and more affordable housing building would be good but I cannot see this government doing that. Personally I think that credit needs to be less freely available and lower limits on low earners. It is not in peoples interest to be able to borrow massive amounts on their credit card when they are on minimum wage salaries.

    Shame how debt blights peoples lives.
    Early retired in December 2017. Debt counsellor for a High Street bank in a previous life.

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  • datlexdatlex Forumite
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    Unfortunately I think it is only going to get worse. Minimum wages don't raise wages they lower them. It tells employers the lowest they can get away with paying. I personally think we are facing a dim future with huge job losses which will impact on wages.
    Paid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.
  • As a teacher I strongly believe that education in n finance and budgeting is where a huge part of the problem lies.

    And why, when you start uni at 18,19 and you open a student account are you in most cases handed a credit card? I was and my wife was too. We both were given a Barclaycard with very low limits. Over the years the limits creeped up - on my wife's we ended up, 14 years later with same card but £13,000 of debt.

    It's a cynical ploy to get (financially) uneducated people wrapped into the cycle of debt. When I was 18 I had no idea about interest rates and how they worked and I'd guess the majority of young people will be exactly the same now.
  • I fail to understand why credit card companies are still charging high rates when interest rates are so low.

    Credit card companies justify their high rates because so many people default and subsequently they have to write off huge amounts. Even if they don't write off debt, chasing it is expensive, debtors move without telling them and the debt ends up statute barred anyway. You can see their point, but they shouldn't make so much debt available to people who cannot handle it.
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  • kimplus8kimplus8 Forumite
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    I fail to understand why credit card companies are still charging high rates when interest rates are so low. I am even more staggered that people will pay those rates in the first place.

    Shame how debt blights peoples lives.
    Credit card companies use extremely clever marketing tactics which is why people will pay it.
    They have created a generation of people that believe you cant survive without credit.
    Think about it, with any other product, it has to be sold to the consumer......You go into a shop, the product is demonstrated to you, you shop around for a good deal and the company uses customer service or deals to have your custom.:mad:
    With credit, they don't need to sell the consumer the product, consumers literally beg/ and pray to buy their product 'credit'. And as for the 0% interest deals, only 25% of consumers clear the balance before the 0% deal ends, the other 75% ends up switching over to paying interest.:eek:
    That is some kick !!! marketing there, the only product that has ingrained in our brains that we need their product to survive in life. It makes me feel a bit sick to think of how from such a young age we are lead to believe that we need credit.:(
    Dave Ramsey and Martin Lewis are my Money Saving Heros
  • Hmm, parallels with this post from a few weeks back.
    Low wages and high rents are certainly one of the contributors to high unsecured debt but also lack of education on budgeting and money management. Giving someone 6 months interest free will certainly give some breathing space to those unfortunately struggling with debt
    From what I see, the "six months' breathing space" thing is a call to make the freezing of interest and charges enforceable for the first 6-12 months, rather than voluntary as it is at the moment. While it will certainly help get the DMP set up, if a person is on a DMP and can't afford food, then their DMP is wrong. That part doesn't need legislation to solve.

    As to why a lot of people are calling for help at the same time... about every 8 years or so, there's a recession - people buy less, jobs are lost etc.. While it may feel we haven't left the last one yet (as there's been no happy boom-y feeling in between the busts), we did, in fact, have a period of growth and easy credit, and are about due some bad times.

    The banks have a better weather eye than we consumers - if there are clouds on the horizon, they're not going to be lending to higher-risk borrowers. Who do borrowers turn to when there's nobody left to borrow from?

    Stepchange.

    As to the interest rates bit, the CC companies charge the maximum rate they can get away with. They're also using the people with carried or problem debt to sponsor all those lovely 0% and cash-back deals that others of us benefit from. And when a debt goes sour? It's sold on, and the loss written off against corporation tax - so the lender effectively recovers the debt from the Treasury.

    As to how to improve it? Lots of ideas... none good.
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