Up to 8.3 million UK citizens cannot afford to pay their debts – much of this amount owed to banks. Furthermore, UK lenders spent upward of 8.1% on the previous year in 2018, showing a massive increase in borrowing. Finally, a 2018 Bank of England report showed that credit union members had exceeded two million for the first time.
It seems increasing numbers of us are turning to banks and other lenders to keep ourselves in pocket. Unfortunately, this also means that our debts are growing – causing us worry, stress, and financial hardship.
Although many might blame public spending cuts for increasing debt, the changing economic landscape has also had a substantial impact.
Generally speaking, the cost of living has increased but wages have remained largely unchanged. Furthermore, the rise of gig and shift working has made it difficult for many to manage their finances due to the absence of one fixed paycheck.
As a result, more people are turning to credit in the form of bank loans, as well as payday loans, credit cards, store cards and overdrafts. Unfortunately, with more avenues to borrow, debts can begin to accrue, particularly when coupled with high-interest rates (which are typically associated with unsecured loans) and demanding or inflexible repayment strategies.
It's important to note that financial hardship isn’t the only consequence of this. Unmanageable debts can trigger mental health issues such as anxiety, depression, shame, embarrassment, stress, and denial.
If you are struggling with bank loan debt, you are not alone - help is available. First, start by listing all debts held along with the interest rates and repayment schedule. Next, decide whether you are going to tackle these in a particular order (such as the one costing you the most money) or whether you are going to consolidate multiple loans into one to help you manage your repayments.
Once you have decided on a strategy, it's time to have an honest assessment of your spending habits. Calculate your incomings, your essential outgoings (food, bills, heating etc) and see where you can cut any non-essential costs.
It's a good idea to talk to your bank and weigh up their debt solutions, such as seeking available government assistance or signing an Individual Voluntary Arrangement (IVA) to help you avoid bankruptcy.
Bank loans are a common source of debt and something we usually deal with every day. This is a common source of financial frustration and our experts don’t judge, patronise, or demean. Instead, all they want to do is listen and help.
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