24 November 2008
Low income families are in danger of amassing large debts over the festive season by relying on expensive forms of credit, it has been claimed.
According to a survey by Action for Children, one-quarter of people on low incomes who plan to borrow money this Christmas intend to use credit offered by catalogues.
One-fifth of those questioned said they would be using store cards to purchase gifts and festive goods, while one in seven said they would get credit from a doorstep lender.
But Action for Children warns that these forms of credit are much more expensive than personal loans on offer from other lenders.
The research also shows that almost half of all those polled did not know what annual percentage rates were.
This could lead to serious financial problems if people are unable to work out how much their debts will cost them.
Richard Marett, chief executive of the education company Whizz.com, said recently that debt problems could be exacerbated by poor maths skills because consumers may find it difficult to understand borrowing terms.
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