Borrowers ‘forced to look at higher cost alternatives’

Consumers are more likely to take out higher cost loans as the credit crunch impacts, it has been claimed.

Chris Tapp, director of Credit Action, explained that as credit is less widely available, people are more likely to turn to more expensive alternatives.

Mr Tapp explained that consumers who have often been able to rely on high street credit cards will now find these products are harder to obtain and will therefore have no other option than to take out a higher cost loan.

However, in general people’s spending is likely to decrease this year, he claimed, adding that this will lead to a general decrease in overall borrowing.

“It’s likely to be a year in which, as the economy more generally slows down, the rate of borrowing will – to an extent – slow down with it,” he concluded.

Debt Help UK has revealed that 74 million credit cards have been issued in Britain and that the UK has five times the European average amount.

© Adfero Ltd

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