Debt advisers encourage caution as Britain’s disposable
incomes shrink
Released
on: September 3, 2008, 4:56 am
Press
Release Author: Debt
Advisers Direct
Industry:
Financial
Press
Release Summary: Responding to the news that average bank balances
are down by 5% compared with last year, debt solutions company
Debt Advisers Direct have warned that there may be tougher times
ahead, and advise people to make sure they are protected.
Press
Release Body: Responding to the news that average bank balances
are down by 5% compared to last year, a spokesperson for debt
solutions company Debt Advisers Direct said that
this is a clear sign that the credit crunch and fast-rising inflation
is starting to truly affect consumers.
HSBC
reported that average balances of its 8.2million customer accounts
had fallen by 5% in the first six months of 2008, as rising costs
of living and inflation at a 16-year high puts increasing pressure
on consumers’ disposable incomes.
The
Debt Advisers Direct
spokesperson commented: “This is one of the first clear
signs that people are feeling the pressure of the credit crunch,
even if 5% is a relatively small figure.
“It’s
been said many times that the impact of the credit crunch would
take a while to filter through, and it would appear that time
has come. Prices and living costs have reached the point where
they are beginning to have a clear effect on bank balances –
and that should be taken as a warning that it’s time to
act.”
The
spokesperson continued that while many people may not feel they
have been significantly affected by inflation just yet, many leading
economists have suggested the worst is yet to come.
“Economists
have been predicting a more severe downturn for some time, and
while that hasn’t happened yet, there are clear signs that
the economy as a whole is slowing down,” he said. “This
is likely to lead to further cuts in disposable incomes, especially
with the sharp rises in gas and electricity prices due to come
in shortly.”
HSBC
had also suggested that some of the reduction in disposable incomes
might be due to more people transferring money into savings accounts.
In reaction to this, the Debt Advisers Direct spokesperson
commented: “It would be reassuring to think that a large
part of the lower disposable incomes is due to savings –
and some of it probably is – but research suggests that
most people do not save enough money for their future.
“Saving
will become increasingly important in the next few months. Just
a few hundred pounds put aside can be a useful financial buffer
when money gets really tight.
“Of
course, there are some people whose income simply does not stretch
far enough once all their living costs are taken into consideration
– particularly people struggling with debt – and those
people are most at risk.”
The
spokesperson added that for anyone who finds themselves struggling
with debt, or thinks they might be about to, it’s essential
that they seek professional debt advice as soon as possible.
“There
are several solutions out there for people who find themselves
struggling with debt,” he said. “For people with multiple
debts who are getting by but want to simplify their finances,
a debt consolidation loan could help.
“Debt
consolidation loans involve combining all your existing debts
into one, meaning you pay only one lender instead of many, and
you may be able to reduce your monthly payments this way. However,
you are likely to pay more in the long run if you do reschedule
payments.
“Debt
consolidation is a good way of freeing up extra funds each month
– which could be crucial if the economy does hit hard times.”
He
continued that even for those with unmanageable debt problems,
there is help available. “For more severe debts, a debt
management plan or an IVA
(Individual Voluntary Arrangement) might be more suitable.
Both can reduce your monthly payments in line with what you can
afford.
“Before
making any decisions, though, you should always contact an expert
debt adviser. They will talk you through your situation and decide
which debt solution is appropriate for you.”
Web
Site: http://www.debtadvisersdirect.co.uk
Contact
Details: For more information please contact Melanie Taylor, Head
of Corporate Communications, DebtAdvisersDirect.co.uk
e.
melanie.taylor@debtadvisersdirect.co.uk
t. 0845 056 6480 or visit the
w. http://www.debtadvisersdirect.co.uk
2009
