Skip to main content
Menu

Loans and overdraft borrowing growing faster than credit cards

Personal loans and overdrafts are becoming more competitive and easier to get.

loans-image

Borrowing through personal loans and overdrafts is on the rise after years of decline and has overtaken credit cards as the fastest growing form of unsecured borrowing.

Annual growth in unsecured borrowing is running at 2.1% in total.

This is largely thanks to more personal loans on offer and borrowing becoming easier, according to the British Bankers Association (BBA), who released the figures.

borrowing

Back in black?

The BBA figures also indicate that people are shrinking the size of their credit card debts with average repayments exceeding spending.

This could be a sign that the UK’s personal finances are improving.

Total credit card debt of £8.1 billion was slightly lower in September 2014 than in September 2013.

Easier borrowing

David Mann, Head of Money at uSwitch, said: “The new data confirms banks are back in the unsecured lending business.

“With new personal loan rate offers in the 4% range it’s not surprising more and more people are using them to finance projects instead of using a credit card with a rate in the high teens.”

This week it became possible to borrow more than ever before, with Sainsburys offering a £35,000 unsecured loan in an industry first.

Borrowing in general has become much cheaper in 2014 as interest rates have been dramatically falling in the secured loans and mortgage markets.

Personal loans, what are they good for?

Personal loans are good for short-mid term borrowing, as typically the interest rates are much lower than credit cards, however unlike a credit card the repayments are fixed and usually higher, though this does make them cheaper in the long run.

Like all unsecured lending eligibility criteria applies and there are penalties for defaulting, so make sure you understand everything about loans before borrowing.

Read more…

Compare personal loans – Comparing personal loans to get the best rate for the amount you need to borrow could save you thousands over the lifetime of the loan.

Check your credit score – Checking your credit score before applying for a loan can also save you a lot of money, as unsecured lending is not offered against any form of security (eg a car or house) so the better your score the better your rate.

 

  • Adrian S

    and this is why people don’t switch, because they all follow each other. i changed from Atlantic to Sainsburys energy, because it would be less, now I am paying almost the same per month, once my contract is up, I will be going back to Atlantic.

  • Nut Magnet

    Even worse than the higher costs. I moved into a property 4 years ago and the gas and electric meters were over £50 in debt. The standing charges had racked up and I called Npower before I put any credit on the meters. NPower said they couldn’t help immediately and I would need to make an appointment which could be up to 72 hours to have the meters reset. I could however charge the key and card and clear the debt and they would reimburse the charges if I was not at fault. Having cleared the debt and calling NPower back to chase the money I was told I should have made the appointment to have the meters reset and they could do no more.

    Be careful if you take on meters with debt. If you clear the debt it’s down to you to recover the monies from the previous occupier and of course the energy supplier will not help there because of confidentiality issues…

  • shelly purdy

    All I do is ply these sodding meters with all my money…. we use hardly anything…. freezer, tv n 1 light…. You tell me !!!! Im sick of UTILITY WAREHOUSE !!!!! they mucked up direct debit n I payed 3 times and in end let them fit dam meters…. 1800 in debt ! WHAT A JOKE !!!!! payed n there court charges on top of…. When id paid bill n refused to pay another bill until they sorted out…. cost me in bank charges too…. n still on going 2 yrs later !

    • Mary

      Moved to a house with prepay meter with a debt, topping up upto £40.00 for gas per week, my hubby call Scottish Power whom we are with in our previous home on direct debit but was told that they will pay the money back but till now nothing has been done. We switch supplier to E.on and asked for a normal metre but it not reply.

    • Mary

      Get Ofgen involve with copies of all your letters and names and time of your calls

  • shelly purdy

    LET ALONE THE GAS… ALSO PRE PAY METER N HAVE RECIEPTS !

  • shelly purdy

    ON TOP OF THIS IS TALK TALK !!!!! 118 118 CHARGED ME NEARLY £100.00 IN 3 CALLS I NEVER MADE TO FIND OUT ? WAS TO THERE HELP CENTRE !!!!!! WTF !!!!! ment to be free phone number n there error YET AGAIN ! FFS !

  • shelly purdy

    RIP OFF BRITON !!!!! YEP SPELT WRONG ! just coz im pissed off with BEING RIPPED OFF !

Categories