Warning over spiralling borrowing
According to price comparison website Uswitch, in 2007 1.3 million debt consolidation loans were issued to people aiming to manage all their debt in one package.
Additionally, a recent survey from YouGov has shown that 25% of people taking out a consolidation loan have gone on to borrow more and failed to discharge their existing debts. The new voluntary Banking Code, which came into force in April 2008, says that banks must do more to help customers in financial difficulty and issue more warnings about the dangers of failing to pay off other debts.
Consolidation loans have proved controversial, although they are attractive to borrowers as it is deemed easier to keep on course paying back a single debt, it can actually push some households further into debt.
If you want to know more about debt consolidation and the alternatives available to individuals experiencing financial difficulties, then please visit our sister website Relief4Debt.
Date: 2nd June, 2008
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