Overcoming debt

By CLARE HALL
Updated:

 

Easy credit is plunging hundreds of thousands of consumers into financial crisis, according to a national debt helpline.

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DebtCall is predicting that consumer debt will be up by 6% in 2000, reaching £660bn. If so, this will mean a rise of more than 30% over five years.

David Thompson, the helpline's marketing director, believes soaring debt is largely due to the plethora of credit deals available on the High Street.

He says: 'Shops are desperate to get more customers at this time of year and many offer 10% off if a store card is taken out. But once signed up, there are constant promotions encouraging customers to keep on spending. And then they are hit with huge interest charges.'

The credit card marketplace has also become increasingly competitive over the past decade. With US card providers, charities and demutualised banks now all vying for a slice of the action, there are hundreds of cards available. As a result, DebtCall often sees people who own five or more credit and store cards.

Thompson says: 'Within a couple of decades, we have moved from being a cash-orientated society to a credit-accepting society to a debt-ridden one.'

The helpline is gearing up for a surge in crisis calls as December's overspending comes home to roost. In anticipation, DebtCall has come up with an action plan to help borrowers keep debts from spiralling out of control.

STEP ONE: Recognise you have a problem. Ask yourself a few questions: 'Are you struggling to pay your monthly direct debits?'

'Are you using credit and store cards to pay for food and everyday items?'

'Are you considering taking out another loan to pay off some of your debts?'

If the answer to any of these questions is yes, then you should move to STEP TWO. Seek professional advice from a debt counsellor. They will advise you to stop borrowing while you move to STEP THREE - working out a repayment plan.

DebtCall can be contacted on 0800 980 5060.

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