Not enough interest in rates

Many people are getting into deeper debt than they should because they do not care enough about the level of interest they are paying, it has been revealed.

A study by MyVoucherCodes.co.uk revealed 52 per cent of those taking out credit have done so without checking the interest rate first.

Of this group, 32 per cent admitted they were in serious debt, which may indicate that many are literally paying a heavy price for not checking before they signed on the dotted line.

With such high charges faced, some could find themselves needing a debt management plan or even an individual voluntary arrangement (IVA).

Chairman of MyVoucherCodes.co.uk Mark Pearson said: “Interest rates and APR are something that any borrower should be fully aware of before signing up for anything.”

He went on: “It’s up to the lender to tell you all about the terms and conditions of borrowing money from them, but as we are all probably aware, that’s often something they hide in the small print.”

Mr Pearson warned that those who are vulnerable to high charges can include people taking out small amounts, because the debts on these can escalate quickly, not least when not paid quickly.

This description could apply to credit card debt, which may spiral out of control if people only pay the minimum amount.

People who do take out an IVA may find this brings the debt back under control, although it requires agreed payments to be made over a period of up to five years.

The debt cancelled by IVAs may have been a major contributor to the £182 million of debt written off each day in March, according to figures from Credit Action.

By James Francis