Thursday, August 11, 2011
Category:
Secured Loans
Consumer Credit Counselling Service (CCCS) has revealed that it is ‘concerned about the low levels of savings of over five million UK households’. According to new research commissioned for the leading debt charity by the Financial Inclusion Centre, 4.3 million households have no savings and 1.1 million households have less than £1,000 set aside.
CCCS believes that people without adequate savings are likely to turn to credit to fund unforeseen purchases. Research from the Department for Business, Innovation and Skills reportedly backs this up, as it was found that 27 percent of households with no savings are reliant upon credit to meet everyday living costs ‘all the time’. In comparison, just nine percent of households with £1,000 to £10,000 worth of savings were found to be in this situation.
CCCS is of the opinion that this can lead to a debt problem because low levels of savings are one of the primary reasons for people falling into unmanageable debt. Statistics show that just 5.4 percent of people who seek help have savings, and those who do have savings have an average sum of £5,334.
It is predicted that the situation will worsen, with many people being unable to save due to ‘budget squeezes’ such as high inflation and wage freezes. CCCS has revealed that people should aim to have a minimum of three to six months worth of savings set aside – in addition to their long-term savings – in case an unexpected event occurs.
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Homeowners who may be struggling to set money aside each month – perhaps due to juggling expensive credit card repayments – could consider taking out a
secured personal loan. One of many finance options available, secured personal loans could allow borrowers to tie up any existing debts, leaving them with just one monthly repayment, which could be lower than the sum of current outgoings. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
