With the emergency Budget fast approaching , research by price-comparison people uSwitch paints a worrying picture of the way we use debt. According to the survey, almost 1 in 5 of us rely on borrowing to pay for day-to-day living costs, and around 14% of us having difficulty in meeting repayments. Debt charities report an increase in their case load, with Citizens Advice reporting a 23% rise on last year. Many consumers found fuel debts a particular burden.

Part of the problem seems to be the fact that the cost of some forms of borrowing has risen, inspite of the fact that the Bank of England has held down rates to an historic low of 0.5% for more than a year. It can also be tempting to let debts accumulate on credit cards or as overdraft, on what’s often seen as a short-term basis. But personal Finance Experts point out that such debts can easily linger, with monthly minimum-payments projected to pay off some credit card debts as far as 30 or 40 years hence – a longer term than most mortgages.

uSwitch and others urge stripping down your monthly outgoings, and fuel bills in particular, to the bare minimum.

But it’s also worth noting that, according to Bank of England figures, mortgage interest rates have fallen sharply, with some fixed-rate deals, for example, at their lowest average cost since records began. So if you’re a homeowner it’s a good time to consider whether you can use part of the equity in your property to help manage your debts. Options such as remortgaging, or consolidating your debts through a loan secured against your home, can help you to reduce your monthly outgoings – and pay down your debts over the long term.

Tags: Economy, Housing Market, Markets

This entry was posted on Tuesday, June 15th, 2010 at 1:14 pm and is filed under Money Saving Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.