ABCUL recommends personal loans over credit cards
The Association of British Credit Unions (ABCUL) has recommended that consumers worried about debt problems and issues could be far better off taking out a personal loan rather than a credit card if they are looking to raise finance.
The Association claimed that the set repayments associated with personal loans made debt management and repayment far easier and more manageable for those worried about effective budgeting in relation to their debts.
According to a recent report from The Debt Counsellors, one of the major causes of serious debt issues in the UK stemmed from credit cards, which featured in over ninety percent of serious debt cases. The reason for this, claim ABCUL officials, is because of the lack of structure when it comes to repayments on credit cards. With many consumers also sticking to minimum repayments, the interest charges can prove extortionate, and the minimum payment gets swallowed up in interest and barely makes a dent in the principal balance on the card.
Many consumers end up spending years trying to repay their credit card balance with minimum payments, and with the principal balance barely being touched because of interest charges it can take many years for some people to repay their balances. Personal loans on the other hand offer far more structure in terms of how much to pay, how long repayments will go on for, and when the loan will be repaid in full.
A spokesperson for
ABCUL, Abbie Shelton, said that credit card companies could easily adopt the same sort of structure that loans use, and that this would make it far easier for consumers to manage their finances in terms of repaying their credit card debts. He also added that credit card companies should take responsibility and should advise consumers just how much they are borrowing and what the amount that they will be repaying.
Alisdair Milton
3rd November 2006
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