08/11/2007 by Dave.

Obtaining a loan for the purpose of debt consolidation or paying off credit cards can be an effective way of managing your finances, according to one expert.

A spokesman for Sainsbury’s bank advised this week that for many, paying off debt is one of the main reasons to consider personal finance, such as a debt consolidation or secured loan.

Steven Baillie, head of loans at Sainsbury’s Bank, said: “I think the big three [reasons for getting a loan] are sorting out debts, then you’ve got your car and then you’ve got your home improvements.”

He added that a number of people who get a loan to make a big purchase often incorporate some sort of debt repayment into their spending.

“When people are buying something they sort out credit cards at the same time - it’s an opportunity for them to review their position,” he concluded.

A recent study by Credit Action found secured lending in the UK during September had risen by £9.8 billion on the previous month.

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04/07/2007 by Dave.

Britain’s school leavers have been warned of the dangers of getting into serious debt, with a nationwide campaign organised by the Office of Fair Trading (OFT).

In conjunction with the Trading Standards Institute (TSI), the OFT will tomorrow (June 27th) run the final of the Young Consumers of the Year competition, which will seek to find the individuals with the greatest understanding of debt and personal finances.

At the moment, the average amount of money owed by those aged 18 to 24 is £12,790, largely because of the escalating costs associated with university education.

Personal loans account for around 56 per cent of borrowing among young people in debt. Credit cards are responsible for a further 28 per cent and overdrafts account for seven per cent. Store cards, catalogue debt and other sources are all responsible for a negligible amount of total borrowing.

Among those aged 40 to 59, personal loans account for just 39.9 per cent of all borrowing, while credit cards contribute 50.6 per cent.

Ron Gainsford, chief executive of TSI said: “Young people want to live for the day but the problem with debt is that it affects consumers many years afterwards. When buying on credit you should try to shop around for the best rate, check on repayments and if you get into difficulty get advice as soon as possible.”

According to figures published by the Liberal Democrats, personal debt as a proportion of income increased from 105 per cent in 1997 to 164 per cent last year.

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