Video transcriptBorrowing on credit cards has hit its highest level for five years, but if your borrowing gets on top of you, you could regain control of your finances by refinancing through personal loans, secured loans or even a remortgage.
The British Bankers Association (BBA) has indicated that as a nation, we made close to 200 million card purchases during March this year, totalling nearly £12 billion. These figures are 13 per cent and eight per cent higher than the same point in 2013.
There`s nothing wrong with spending on credit cards, as long as you are comfortable with keeping up repayments, but with credit now being more widely available, people who are less able to pay it off may find themselves racking up an increasing debt which they cannot get back down.
Analysts reckon that building an economy based on consumer borrowing isn`t sustainable and while that might not seem important to many of us, a failing economy could lead to a return to recession, fewer jobs and finding it harder to pay off our bills.
If you`re having trouble paying off what you owe already and cannot make cut backs on other areas or use savings to get back in control of your cash flow, now could be the time to think about secured loans. These can help homeowners and mortgage payers to pay off a group of smaller, unsecured loans like credit cards, store cards and car finance, leaving you with a single, smaller repayment to make each month.
While that will mean you`ll be spending less month-on-month, you will probably pay more in interest, as the new loan may be for a longer period than your existing ones. Secured loans are secured on your home and therefore carry similar risk to a mortgage if you do not keep up repayments. Weigh up your options thoroughly before taking on any form of secured debt.
To chat through your secured loan or remortgage options enquire at firstchoicefinance.co.uk or call us on your mobile on 0333 003 1505 or 0800 298 3000 from a landline.
What exactly is a secured loan? A secured loan is a loan secured on your home - this provides some form of security, or collateral. You can often borrow more with loans secured on property, potentially up to £200,000. Secured loans have interest rates that can be lower than that of an unsecured loan for someone with the same credit profile because of the lower risk to the lender. An unsecured loan simply means that there is no `security` for the lender as in the case with a secured loan, and this therefore means a higher risk for the lender. In the absence of security or collateral, the lenders may offer higher interest rates in order for the loan to be more viable for them - especially if you have a poor credit history. This is known as rate for risk.
An advantage of secured loans is that you stand a good chance of being approved even if you have some adverse credit history like county court judgements, defaults or arrears. So a secured loan is a good choice for those who would otherwise not qualify for a loan from their local bank.
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